Retail can be a tough business. Profit margins tend to be small, and competition is fierce. But companies can compete in other ways, and find lines of business to complement their existing business.
Some retailers have turned to technology investments to stay ahead of the industry, and in some cases, that’s even become a major source of revenue amid the uneven world of predicting ideal retail trends.
Among retailers, Overstock.com (OSTK) has been a surprising winner in recent days. That’s because the company has invested in tZERO, a broker-dealer that enables the trading of digital securities. That’s a piece of technology that Intercontinental Exchange (ICE) is looking to invest in as well.
Additionally, the company’s core business saw strong holiday sales, particularly among Thanksgiving and Cyber Monday sales. That led to the company beating earnings on Wednesday.
The move higher helped shares reduce their loss in the past year to 48 percent.
Action to take: the company’s valuation looks attractive here. Besides the growing tech investment, shares trade at 13 times forward earnings, and earnings are up 30 percent in the past year. This is one stock likely to continue moving higher in the months ahead.
For traders, the June $50 calls, last going for about $6.65, are likely to move higher in the coming months. Traders may be able to buy a bit more cheaply in the short-term, given the current market fears, but could still see this option rise by mid-to-high double-digit gains.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.