Why sell?
I still believe in the long term future of Vera Bradley, but I do not think it is the best stock to have in your portfolio right now. The company has committed to long term growth instead of meeting short term earnings expectations. Investors have already started placing puts (betting against the stock), and the share price continues to fall. I do not know exactly when Vera's long term investments will start to result in strong cash flow generation, and because of that I do not feel comfortable owning the stock.
Potential pick later on
In terms of long term valuation (5-10) years, I believe that Vera Bradley stock is heavily undervalued. There is a good chance that I could recommend to buy Vera again. Furthermore, when Vera's long term investments do start to pay off, the stock will most likely take off like a rocket. As investors, it is important to know when to cut our losses. Although it may seem painful to sell Vera after a 35% drop, it is the necessary thing to do. There are better investment opportunities in the market right now; and the best time to sell is when there is a better investment opportunity. It definitely stings for me to have picked a loser, but the fact of the matter is that Calinvestments has indeed performed well on aggregate. Despite Vera's 35% drop, Calinvestments growth strategy has resulted in big winners such as Mako Surgical (up 20%), Panera (up 27%), LinkedIn (up 30%), Lulu Lemon (up 95%), and Green Mountain Coffee Roasters (up 144%).
No comments:
Post a Comment