Opinions
The Panic-Proof Portfolio (Stockchase Research)
GigaCloud Technology Inc.
GCT-Q
PAST TOP PICK
Aug 08, 2024
Stock price when the opinion was issued
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The btb global shipper of large bulky items (fitness equipment, furniture, etc.) has 33 warehouses worldwide with over 5000 businesses from India to Canada. It trades at 13x earnings, 4x book and supports a 38% ROE. Cash reserves are growing, while debt is retired and shares bought back. We recommend setting a stop-loss at $15, looking to achieve $39 -- upside potential of 18%. Yield 0%
(Analysts’ price target is $35.50)Our data shows 16.7% short. We tend to ignore anything below 5%, and at 10% we like to understand the short thesis. 16.7% is quite high but in and of itself does not mean much. The stock is up 586% in a year so shorts have clearly been crushed. It is very cheap on an earnings basis but growing fast. It does have a lot of debt so shorts may look to cover on an equity issue one day. It is a small company, and with the short interest we would expect heightened volatility, certainly. Recent results were good and guidance was affirmed. So fundamentally it looks OK and is still priced well.
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GCT offers a marketplace platform for manufacturers of larger parcels like furniture, appliances and fitness equipment in Asia with buyers in North America and Europe. It trades at 9x earnings, under 3x book and supports a 38% ROE. Cash reserves are growing, while debt is retired. We recommend setting a stop-loss at $16, looking to achieve $32 -- upside potential of 28%. Yield 0%
(Analysts’ price target is $51.37)We reiterate this global direct to consumer shipper or larger home products as a TOP PICK following recently released earnings, showing a 68% increase in net earnings, We like that cash reserves are growing and debt is retired. It trades at 10x earnings and supports a robust 39% ROE. We recommend trailing up the stop (from $16) to $18, looking to achieve $31 -- upside potential of 28%. Yield 0%
(Analysts’ price target is $51.37)GCT is an Asian based online platform linking manufacturers with customers in America and Europe. It has seen phenomenal growth in the past years — merchandise volume up 80% last year — and analysts foresee EPS growth of 27% annually over the next five years. The threat of tariffs on the business has now been factored into the share price. It trades at 5x earnings, under2x book and supports a ROE of 39%. We recommend setting a stop-loss at $14, looking to achieve $24 — upside potential over 28%. Yield 0%
(Analysts’ price target is $50.33)
Our PAST TOP PICK with GCT has triggered its stop at $24. To remain disciplined, we recommend covering the position at this time.