How I Found a 30% Profit Opportunity Walking Down Main Street

Editor’s Note: Chris Johnson is back today, explaining a profit-finding technique that doesn’t involve sitting behind a computer screen. And it’s one I may have to try myself – considering it handed him a stock with the potential to jump 30% in the first quarter of 2021…

This weekend, I took what I call “A Walk Down Main Street.”

Now, I’m not talking about the dichotomy between “Wall Street” and “Main Street.” I’m not referring to a metaphorical street filled with average American investors.

No, I literally hit the streets, sneakers on and all. Because around me, “Main Street” is stacked with publicly-traded companies…

And that means it’s stacked with profit opportunities as well.

The purpose of these “walks” is simple: connect with what is going on in the market at the “Street Level” – something that can be very telling in the heat of the holiday shopping season.

The results, however, were a little surprising.

One crowded store, in fact, led me to a stock set for a 30% bounce by the end of March…

The Surprising Part of my Holiday Walk Down Main Street

Michaels Companies Inc. (NASDAQ: MIK) – you know, the arts and crafts place – is hot. I’ve got to be honest, I lost money trading this stock a few months ago. I thought it was time for the stock to take off and instead, it fizzled. That happens when you’re trading the market.

But today, you can learn from my mistake.

This weekend, I made my way through all the big retailers. The fact is that for the most part, they were all quiet. With a little more than a week left in the “shopping season,” there were some stores with more employees than shoppers.

Hell, one of the holiday favorites, Best Buy Co. (NYSE: BBY), has a few locations in my area that are newly closed. And the one that I was in was vacant. For what its worth, BBY’s chart is indicating a rough first quarter.

Not, I know what you’re going to say…

CJ, they’re all doing business online this year.”

Sure, the data is showing a 70% increase in online shopping activity, but there’s still something missing…

You see, the real winners in the online shopping trend are the smaller operations. My theory is this: We’re being told to get out there and support smaller businesses, and that’s exactly what we’re doing.

Retailers like Etsy Inc. (NASDAQ: ETSY), RealTeal Inc. (NASDAQ: REAL), Chewy Inc. (NYSE: CHWY), and Stitch Fix Inc. (NASDAQ: SFIX) are nailing it in the retail space. Not surprisingly, these are companies that are smaller and more in-tune with the online shopping experience.

Now, I know that these aren’t “mom and pop” local businesses, but in the case of today’s shopper, they certainly aren’t the “big box” retailers that ruled the shopping landscape just a few years ago. But there’s a trend here that’s set to continue, and its very trade-worthy as we enter 2021.

Let’s bring it around to my “Walk Down Main Street” and the opportunity it offered.

As I said, the MIK stores (two of them) were by far the most crowded. The reason? Nostalgia, maybe, and a connection with ETSY (one of my favorite stocks in 2020).

First, the nostalgia. We’re all craving a little bit of normalcy as we get through the holidays. What’s more nostalgic than families getting together to decorate, bake, hang pictures, and make crafts? You hit the Michael’s store to do that.

Second, ETSY. Those local artists that are selling items on Etsy (yes, you can support your local artist on Etsy using the “filters” in the search area) are going to Michael’s for their supplies to turn profits.

Finally, the pandemic has a lot of people looking for ways to save money. Hit up MIK stores for the materials for the DIY-er that’s looking to save money!

That’s more than enough to get me excited about the upside potential for MIK as we head into 2021. That said, the chart backs up my outlook.

Let’s look…

  • Shares surged after their latest earnings results. The company beat expectations and turned in their best year-over-year revenue growth in more than five years. That surge established a new range above $11.50.
  • Shares recently pulled back from an overbought reading of their relative strength index (RSI). This indicates that the stock now has more room to run higher.
  • The stock just saw a “Silver Cross,” as its 20-day moving average crossed above its 50-day moving average. This identifies a strengthening bullish trend.
  • Finally, the stock’s 50-day recently shifted into a bullish pattern, as it is now on the rise. In other words, my Trading Commandment Number One: “The Trend is your Friend,” is coming true here.

Shares of MIK also broke into a long-term bullish trend a few months ago as the stock broke above its 20-month moving average. That’s the first time the stock has started a long-term bullish trend since 2018.

Given the chart and the recent trend in earnings, I’m targeting a move to $16 during the first quarter. This would result in a 30% gain for those grabbing the stock at current levels – a pretty impressive stock gain!

I’ll be back the remainder of this week, bringing even more profit opportunities straight to your inbox.

Next time you’re bored, take a walk down your own Main Street. You’ll be surprised what you can find…

Chris Johnson

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