TOYS R BACK - Bullish Beginning & Bottom

28 окт.

Reasons to be bullish on ToysRUs / TOY:

Recently completing a double W bottom, TOY is looking like it is about to escape the jaws of bankruptcy and begin a dramatic resurgence in price.

The long diagonal white line if broken will be the first time that has happened in over a decade and should it do so, it is likely to kickstart a period of intense buying, from shorts covering their positions. If you wish to play it safer, wait until the inverse head & shoulders plays out, above the yellow slanted line.

The company recently announced a loss 19m AUD in it's Annual Report, which was lower than expected following the transformation of the 'House of Brands' strategy they are now pursuing.

Thanks to the increased margins of their newly acquired brands, the dramatic cost-cutting efforts that are underway, the new store partnerships being pursued as well as the profitable holiday season that is fast approaching - I think we have far more reasons to be bullish than bearish here.

Talking of bullish...

• Target 1 should it come to pass will be 0.850 AUD per share vs 0.063 at the time of writing - a 13.5x. This is the 0.236 fib to retrace just a short distance of its prior decline.
  
  
• Target 2 would be $20 AUD - a 317x from current price levels, at the 0.5 fib level.
  
  
• Target 3 should you wish to dream so big, would be ~78 or 80, at the 0.618 level.
  

Those targets may sound like something from a TOY store, right? Well, this brand has so much going for it in the years ahead.

Not only are we on the cusp of a potential boom in its stock price, we may well be about to turn a corner with a huge baby boom all across the entire Western world. This is against the trend & narrative on display everywhere.

Something tells me ToysRUs is about to dramatically grow their loyal customer base of 1.3 million customers. So why not benefit whilst that happens?

Risk averse? A stop loss of $0.048 AUD will likely preserve your capital from here. I'm expecting a sharp and sudden impulsive move up out of this latest & last grey descending wedge. Likely to Target 1 within the next 6 months, but be quick because your window of opportunity for a turnaround in the huge holiday season is closing. It will likely be priced-in before earnings on 26th March 2025.

Thanks for reading!