The Arena

The S&P 500 looks to have side stepped a major bear market as of today. Volatility is declining and it looks as if investors are getting more comfortable with the current economy and increasing interest rates. That said, we’re far from out of the woods and with even the slightest breeze this house of cards could fall. Be sure to stay on top of the geopolitical landscape as that seems to be the most obvious snafu waiting to happen.

In today’s trade I’m looking at Big 5 Sporting Goods Corp. (BGFV). They’ve been on my radar for about a year now and have been in a steady decline since November of last year when price went parabolic over the special dividend. It does appear as if most of that craze has died down and Big 5 Sporting Goods seems to be a potential candidate for an intermediate term hold. I guess we’ll find out if the shoe fits in the days ahead.

The Coach

Big 5 Sporting Goods Corp. took a dip today by about 5% which isn’t really a great sign but they did announce earnings so seeing some additional volatility is to be expected. Additionally, after trading considerably lower after the announcement BGFV was able to bounce back throughout the day. Giving me just a shred of hope they could find some life from this quasi low point.

After narrowly missing earnings investors seem to be at relative ease with where the company is standing. However, the headwinds facing Big 5 Sporting Goods Corp. are similar to other retailers in the space. Really, everybody, every where, right now. Basically, they’ll need us as consumers to continue spending to maintain that bottom line. Also worth pointing out is the generous dividend of $.25 per share, or around 8% per year. I do always enjoy earning enough in dividends to tackle inflation.

From my analysis, Big 5 Sporting Goods Corp. is a capable buy candidate. With a healthy dividend and an earnings announcement mostly in line with expectation now could be time to consider this dud, oh I mean stud. Here’s some key insights from MarketBeat.com: Big 5 Sporting Goods (BGFV) Stock Forecast, Price & News

Big 5 Sporting Goods Corp. Stock Price Chart
Big 5 Sporting Goods Corp. Stock Price Chart
Big 5 Sporting Goods Fundamental Analysis
Big 5 Sporting Goods Fundamental Analysis

The Attack

Well, Big 5 Sporting Goods is unquestionably risky given that historically price kind off just trails lower. However, with so many investors jumping in last year near this time period and with back to school shopping in full gear I’m punting with an intermediate time horizon play on BGFV.

Fundamentally, they’re not the obvious choice but given the dividend and the possibility for a dividend raise, it could make sense to see a nearer term pop in price. Although, If I’m going long, shouldn’t everyone else get bearish? We will see how it goes…

Bullish Assumption

Buy To OpenSell To OpenEntry OrderTotal RiskProb. of 50% Profit
25 Shares$12.00$30050%

Bearish Assumption

Buy To OpenSell To OpenEntry OrderTotal RiskProb. of 50% Profit
25 Shares$12.00n/a50%

God Bless,
Jeff

*This post is NOT a recommendation to buy, sell, or trade any security. The information provided within is strictly for entertainment. Traders or investors should always consult a registered financial professional prior to trading or investing.