We're Taking Huge Gains on a Winning Position as the Stock Pops
We have to take advantage of opportunities like these when they present themselves.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
BROS | Sell | 470 | 49 | 3,070 | 3.0 |
After you receive this Alert, we will sell 470 shares of Dutch Bros BROS at or near $49. Following the trade, BROS shares will account for roughly 3.0% of the portfolio.
We are taking advantage of the massive move in BROS shares today following last night’s beat and raise quarter that is spurring a round of price target increases and short covering.
In our opening comments this morning, we cited the company's favorable same-store traffic trends and improving margins, which led management to lift its top and bottom-line outlook for this year. Following recent issues at Starbucks SBUX, including its pulled guidance, short interest in BROS climbed to over 12.5 million shares, per NYSE data. Roughly 11% of the float is short float, and akin to 4.7 days to cover.
While we continue to like the BROS expansion story, which is tracking for this year and should continue in the next few years, as investors we have to take advantage of opportunities like these when they present themselves. So even though we are lifting our BROS price target to $50 from $39, we are locking in big gains today and as we do so downgrading the shares to a Two from One.
As the short squeeze subsides and the shares settle out, we’ll discuss potential price levels where it may make sense to consider adding back some shares. In the meantime, we’ll lift our panic point to $35 from $29.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to click on Closed Trade Gain/Loss and toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long BROS.
