Don’t Fall For The Latest Meme-Stock Headfake

You're receiving this email as part of your subscription to Lou Basenese’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] Don’t Fall For The Latest Meme-Stock Headfake Tuesday, August 16, 2022 Longtime readers know I love the market truism that “Stock prices ultimately follow earnings.” Why? Because stock prices do follow earnings! That is, over the intermediate- to long-term. But in the short-term? Well, as the latest meme stock – Bed Bath & Beyond Inc. (BBBY) – proves, the vagaries of the market can artificially and temporarily interfere with this fundamental law. Trust me, though, it won’t last. Here’s how to profit from the situation (again)... > ADVERTISEMENT < Market Wizard who predicted all indexes would be negative in 2022 shares shocking new forecast: "Prepare for Five Years of Famine" First Things First… I know simply saying that stock prices follow earnings doesn’t cut it. I have to prove it. Thankfully, I can do it with a single chart… A chart that shows the trailing 12-month earnings per share for S&P 500 companies versus the price performance for the S&P 500 index. As you can see, aside from temporary and short-lived dislocations involving major economic events (think dot.com bust, the Great Recession, etc.), the correlation couldn’t be any stronger. (click image to enlarge) Simply put, if earnings are headed higher, so is a stock. And vice versa — which shareholders of Bed Bath & Beyond, Inc. have been learning the hard way for the better part of the last year. On the heels of cringe-worthy collapses in earnings per share of as much as 92%, shares cratered nearly as much. More specifically, the stock peaked around $30 per share last August before plumbing the $4 per share level this July. More recently, though, the stock’s been on a tear, rallying 13 out of the last 14 trading sessions and reclaiming the $16 per share level. What gives? Did earnings suddenly surge? Not hardly! Given the unofficial recession we’re currently experiencing, the earnings outlook couldn’t be gloomier. In fact, the same potent mix of bearish headwinds continue to plague the retailer, including supply-chain bottlenecks... increasing online competition… rising transportation costs… inflation… and the list goes on and on. Heck, in the most recent quarter, the company reported a 27% collapse in same-store sales and a staggering quarterly loss of $224 million. The results were so bad the board of directors fired the CEO. With a mere $107 million left in the bank, there’s no time for a new executive to even have a chance to turn the company around. In short, the company is on life support and destined to end up in the retail graveyard, right alongside Radio Shack, Circuit City, and Sears, among others. Or as Mark Cohen, Columbia University professor of retail studies and former long-time CEO of Sears Canada, recently told Yahoo Finance Live: “Bed Bath & Beyond is in a world of hurt because they have burned an enormous amount of available cash, their business has no forward momentum, and now as we all know they have an enormous leadership gap that they will have to fill.” Get Ready for the Final Flush As I’ve bellyached about before, it’s challenging for a fundamental analyst like me to watch investors pocketing millions of dollars trading trashy meme-stocks like Bed Bath & Beyond. But thankfully, normalcy eventually returns. Mark my words, Bed Bath & Beyond will be no exception. And I’m not alone. Cohen believes Bed Bath & Beyond will “teeter-totter into a restructuring sometime in the beginning of 2023." And I agree. In other words, the stock’s eventually headed back to zero. For right now, it’s time to take our profits from our previous Trend Trader Daily “Trade of the Week” and then simply wait for the ideal re-entry point to make another triple-digit profit. It’s coming!   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Ahead of the tape, Lou Basenese Founder & Chief Investment Strategist   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 301 S. Perimeter Park Dr. Suite 100 Nashville, Tennessee 37211 [Update Subscription Preferences]( | [Unsubscribe from this list]( RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. Please use this research for the purpose that it's intended — as research only. You should consult a professional financial advisor before ever taking a position in any securities you see herein. SECURITY HOLDING NOTICE: Although we are never compensated from any companies for coverage, you should be aware that Trend Trader Daily, its authors, its owners, and its employees may purchase, sell, or hold long or short positions in securities of the companies mentioned in this communication. While authors might actively transact in the securities mentioned, they will always have a net position that is consistent with the position set forth in our research reports, letters and updates. DISCLAIMERS: The work included in this communication is based on diverse sources including SEC filings, current events, interviews, corporate press releases, and information published on funding platforms, but the views we express and the conclusions we reach are our own. As such, this content may contain errors, and any investments described in this content should be made only after reviewing the filings and/or financial statements of the company, and only after consulting with your investment advisor. Actual results may differ significantly from the results described herein. Furthermore, nothing published by Trend Trader Daily, Inc should be considered personalized financial advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. Trend Trader Daily is an independent provider of education, information and research on publicly traded companies, and as such, it accepts no direct or indirect compensation from any companies or third parties mentioned in any of our letters, reports or updates.