Diamonds and Dogs

10/23/15

Tech is back! Better than expected earnings from Google or Alphabet, Amazon, and Microsoft sent the Nasdaq Composite up 2% for the day and up 6% year to date. It was back to the future week for Microsoft (MSFT) soaring 10% to highs not seen since 2000 or 15 years ago. That was a heck of a tech bubble. Microsoft's better than expected earnings were due to strong demand for products like the new Windows 10, Office 365 and cloud computing, Azure. Marty McFly would be impressed with Microsoft's results.

Sketchers isn't doing as well as Nike. Today's dog, Sketcher's (SKX) the second largest US sneeaker company, dropped 31% following record third quarter sales. While sales and earnings came in at record levels, the numbers and growth rate missed estimates by a wide margin verse recent quarters, suggesting that management's strategic shift into low-priced sport shoes may not be sustainable over the long run. However, management didn't lower estimates and even suggested there may be room for upside guidance in 2016. If Management is right, the 31% drop in the stock today could be a buying opportunity.