the big issue here is the potential for a recession which is high considering a) credit spreads b) construction slow down both US domestic and Intl c) international manufacturing (US has little manufacturing. The other outlier is inflation. I run a script that gives me some high level guidance on market conditions. Current recommendation is caution:
Fair point, I sometimes migrate up to midcaps, but Dicks is a journey too far for me. Still a valuable comp to consider, but I don't want to blow sunshine up skirts because often larger companies trade for very different multiples and the gap won't close.
the big issue here is the potential for a recession which is high considering a) credit spreads b) construction slow down both US domestic and Intl c) international manufacturing (US has little manufacturing. The other outlier is inflation. I run a script that gives me some high level guidance on market conditions. Current recommendation is caution:
Sector Risk Scores:
US Manufacturing: 36.0% risk score
Asian Manufacturing: 52.5% risk score
US Construction: 56.0% risk score
Global Construction: 57.3% risk score
Credit Markets: 0.0% risk score
Credit Market Details:
HY-IG Credit Spread:
Current Z-Score: -1.69
3-Month Change: -7.8%
Volatility: 0.01
Recession Risk Analysis
----------------------
Risk Level: High
Probability Range: 60-75%
Reasoning: Multiple sectors showing significant stress
Historical Context: Similar to pre-recession conditions
Timing Analysis
--------------
Credit Markets:
Typical Lag: 3-6 months
Reliability: High
Current Signal: Normal
Asian Manufacturing:
Typical Lag: 6-9 months
Reliability: High
Current Signal: Leading indicator
Global Construction:
Typical Lag: 9-12 months
Reliability: Medium
Current Signal: Leading indicator
US Manufacturing:
Typical Lag: 3-6 months
Reliability: Medium
Current Signal: Normal
US Construction:
Typical Lag: 12-18 months
Reliability: Low (tends to lag)
Current Signal: Leading indicator
How would you position based on this, which sectors? Or just cash and delever?
you are early. technicals also look weak. no cup yet with higher green volume.
Fair, I probably am early on Consumer Discretionary
this one is my fav though. simple model. and i feel like firearms is the same as long volatility.
Why Academy as a comp but not Dicks?
Fair point, I sometimes migrate up to midcaps, but Dicks is a journey too far for me. Still a valuable comp to consider, but I don't want to blow sunshine up skirts because often larger companies trade for very different multiples and the gap won't close.
looks like a public leveraged buyout setup. deleverage and all the upside goes to the equity holders?
Yeah, I think when revenues and income flip positive, all the quantitative strategies will bid it up to 0.5x sales again. Probably a 2 year process.