Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Nov 01, 2019
Chegg is looking to school short sellers with earnings report

Chegg is looking to school short sellers with earnings report

Chegg (NYSE: CHGG) is an online education company that operates a learning platform designed to help students pass tests, classes, and save money on required materials. Chegg Services offers students required materials such as print textbooks as well as eTextbooks. The company also offers Chegg Study which helps students master difficult concepts, Chegg Writing to help students format and cite sources in written work, and Chegg Tutors which allows students to reach out for human help.

The company is set to report earnings on Monday, November 4 and analysts expect the company to report EPS of $0.08, an increase of a penny over last year’s $0.07 EPS. The company has beaten its earnings estimates in each of the last four quarters and I wouldn’t be surprised if it beats again.

One of the more interesting stats about Chegg is its short interest ratio which currently stands at 11.3. With the ratio being so high, if the company does in fact beat its estimate again, we could see a short-covering rally.

Looking at the fundamentals for Chegg, the company has seen tremendous earnings growth over the last few years. The average EPS growth rate has been 122% per year over the last three years. Earnings were up by 92% in the second quarter and analysts expect an overall increase of 35% for 2019 as a whole.

The sales have increased at a more modest pace, growing by 12% per year over the last three years. Sales were up by 26% in the second quarter and they are expected to increase by 25.2% for the year.

The management efficiency measurements show a return on equity of 17.2% and a profit margin of 21.9%. When you combine these two indicators with the sales growth, you get Tickeron’s SMR rating. Chegg’s SMR rating is at 31 currently and that indicates very strong sales and a profitable business model. The SMR rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating for Chegg is also above average at 36. This indicates well-balanced risk and returns. The average Profit vs. Risk Rating for the industry is 77, placing this stock well above average.

Turning our attention to the price performance, we see that Chegg has pulled back over the last few months and that has brought the stock down to its 104-week (two-year) moving average.

The pullback has also brought the stock down from overbought territory to oversold territory. The stock did rally a little at the end of September and beginning of October and that moved the 10-week RSI out of oversold territory and the stochastic readings are flirting with the 20 level.

Looking at some of the daily indicators, the stock moved below its lower Bollinger Band on October 2 and it is flirting with it once again. According to Tickeron’s analysis, in 24 of 30 cases where CHGG's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued uptrend are 80%.

Given the solid fundamentals, the upward trend with the support at the 104-week, and the overly bearish sentiment, I look for Chegg to move higher after its earnings report unless it completely swings and misses in the report.

Related Tickers: CHGG
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

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Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

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Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

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Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

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Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
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Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
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US unemployment rate jumps to 14.7%, the highest in series history

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The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.