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PRO Weekly Digest: Focusing On Long Ideas In The Retail Space

by: SA PRO+ Editors
SA PRO+ Editors
The editorial team for SA PRO, looking for SA's best ideas

We highlight a noteworthy PRO long idea and use the Idea Filter to search for long ideas in the retail space.

Revisiting the bullish thesis on ConAgra.

Welcome to the latest issue of the PRO Weekly Digest in which we publish highlights from our PRO coverage. Comment below or email us at pro-editors at to let us know what you think. Find past editions here. PRO subscribers can access interviews by following the SA Interviews account and view past interviews under the same account.

Click here to read the interview with Scott Kennedy.

PRO idea playing out

Marinus Pharmaceuticals (NASDAQ:MRNS) is up >5x since Jérôme Verony shared his bullish thesis in May 2017 (and increased ~140% since he said it was one of his highest conviction ideas in his recent interview with the PRO Weekly Digest) - that it was an attractive speculative opportunity with encouraging clinical data, a strong management team and multiple upcoming catalysts. In an update comment, he says MRNS is still undervalued (compared to its fair value of $11-20 and to peers), the recent data and financing have de-risked the company and significant catalysts are just around the corner.

Call from the archive - CAG

ConAgra (NYSE:CAG) is ~unchanged since Ian Bezek shared his bullish thesis in August 2017. However as the recent positive earnings report (adjusted EPS increased ~20%, sequential improvement in net sales growth, gross margin expansion) supports the idea of a successful turnaround, and ~30% upside to the price target, this may be worth another look.

Noteworthy PRO articles

We wanted to highlight one of our PRO editors' favorite PRO ideas this week:

SA Editor Jeffrey Fischer, CFA: Selective investor Cabeza Howe sheds light on China Distance Education Holdings (NYSE:DL). This seemingly shareholder friendly company has faced lagging investor sentiment following interruption of some course offerings. He sees potential for a turnaround and rerating of the stock.

Idea screen of the week

Each week we use the PRO Idea Filter to find potential ideas based on a recent news event. This week, PRO Editor John Leonard, CFA looks at value opportunities in a space many investors consider a value trap - retailers.

For value and contrarian investors not totally convinced that every retailer will list Amazon (NASDAQ:AMZN) as their cause of death, I ran a screen of PRO long ideas in the Apparel Stores sector.

Two ideas turned up in this screen that might be of interest (prices as of October 5 close):

Christopher & Banks (CBK) by Monocle Accounting Research: Published on September 6, 2017, up ~10% since publication, and author's price target offers 100%+ upside. The turnaround appears to be gaining traction and CBK is a viable takeover target.

Ross Stores (NASDAQ:ROST) by Brett Kearney: Published on June 16, 2017, up ~10% since publication, and author's price target offers ~25% upside. Its moat is intact (and safe from Amazon) and it is well-positioned to take further share from a deteriorating department and specialty store channel while there is significant white space remaining within the underpenetrated U.S. off-price retail market.

About the PRO Weekly Digest

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Check with individual articles or authors mentioned for their positions.