Roots (ROOT-T)

The buying opportunity came after their Q1 report where they blamed bad weather for poor sales. Otherwise, the quarter was solid: over 6% same-store sales growth, gross margins increased and they're expanding in the U.S. gradually--about to open a store in Boston. Well-managed. They have a great online presence, so there's also growth here. (Analysts' price target: $15.06)

(Past Top Pick, January 25, 2018, Down 10%) They had a disappointing Q1. Roots blamed this on the bad winter weather, which is valid. He'd still buy it. (Also a top pick this day.)

It took a huge beating after the IPO last year and then came back. He has difficulties with their forecasts because they are often more optimistic than they should be. They are moving into the states which will be costly. They are building a new distribution center but they take a while to ramp up. He thinks they will have tough sledding going forward and will not hit their profitability goal so there won't be a dividend any time soon. Their same store sales went up and their revenues went up, so that is positive.

It suffered after the IPO. He Poo-Poo’ed it last time and then a week later he read a great report. The argument was that new management would ring out better efficiency. They are down 23% in SKUs. It gives you a lower quantity of merchandise and you buy more from suppliers. Less is more. They do a fair online business in the US. There is potential to expand down there further down the road. (Analysts’ target: $14.00).

This was a $12 IPO recently. When they went public, it was secondary so the money was being paid to the founders of the firm, and not to the company. So, the company still has to grow. Their category is not a high growth one, just basic attire. Projected growth rates were not that high. The company is really having to prove itself. It is hard to see that what they offer is so unique.

They recently completed their IPO. It struggle a bit out of the gate and has treaded water ever since. It is a fashion brand that has been out for long time. He does not see the growth here. There are a lot of better places to be in retail. Where is the expansion going to come from. He does not see the brand translating well into the US.