What Happened?
A number of stocks fell in the afternoon session after the major indices pulled back (Nasdaq -1.3%, S&P 500 -1.1%) as Israel carried out significant strikes on Iranian nuclear and military sites, dramatically escalating fears of a broader conflict in the Middle East. This development has sent crude oil prices surging, as investors fear potential disruptions to global oil supply and a wider regional conflict.
The conflict intensified market anxiety, compounding volatility, especially in risk assets like stocks, and prompting a pronounced shift toward safe-haven assets.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Specialty Retail company Leslie's (NASDAQ: LESL) fell 8.9%. Is now the time to buy Leslie's? Access our full analysis report here, it’s free.
- Specialty Retail company Petco (NASDAQ: WOOF) fell 5.5%. Is now the time to buy Petco? Access our full analysis report here, it’s free.
- Sit-Down Dining company Bloomin' Brands (NASDAQ: BLMN) fell 8.6%. Is now the time to buy Bloomin' Brands? Access our full analysis report here, it’s free.
- Renewable Energy company ChargePoint (NYSE: CHPT) fell 7.4%. Is now the time to buy ChargePoint? Access our full analysis report here, it’s free.
- Safety & Security Services company GEO Group (NYSE: GEO) fell 6.2%. Is now the time to buy GEO Group? Access our full analysis report here, it’s free.
Zooming In On Leslie's (LESL)
Leslie’s shares are extremely volatile and have had 88 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 39.4% on the news that the company announced underwhelming preliminary fiscal third quarter results.
Revenue is expected to come in at roughly $570 million (below consensus estimates of $619m). Adjusted EBITDA is expected to be $108 to $109 million (below estimates of $132m), and adjusted EPS is expected to be between $0.32 to $0.33 (below estimates of 0.42).
Providing more color on the weak guidance, Mike Egeck, Chief Executive Officer, added, "The cold and wet spring weather we experienced during the fiscal second quarter extended through May, reducing the number of pool days in non-seasonal markets and delaying the start of pool season in seasonal markets. We also continued to see weakness in large ticket discretionary categories as persistent inflation and high interest rates pressure pool owners' wallets. We experienced improved sales trends in June, but the April and May revenue impact created negative operating leverage and gross margin headwinds. While we are encouraged by improved June trends, our revised full year outlook at the midpoint assumes third quarter sales performance continues through the fourth quarter."
Leslie's is down 77.1% since the beginning of the year, and at $0.52 per share, it is trading 89% below its 52-week high of $4.74 from June 2024. Investors who bought $1,000 worth of Leslie’s shares at the IPO in October 2020 would now be looking at an investment worth $23.97.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
