PreMarket Prep Stock Of The Day: The Container Store Group

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

As of late, stocks that were out of favor for a considerable amount of time are mounting a comeback. One of those issues is The Container Store Group Inc. TCS, the PreMarket Prep Stock of the Day.

The stock has some major price action off its second-quarter earnings beat. 

Tight Lid After IPO: The company made its public market debut in November 2013, and its opening print ($32.10) stood as the low for the first two months of trading. It had reached $47.07 by December and ended the year not far off that level, at $46.61.

The Container Store Group immediately fell out of favor in January 2014, falling to $36.75 and embarking on an extended decline that did not find buyers until the stock bottomed in February 2016 at $3.77. The rebound off that low came to an abrupt end in August 2018, when it peaked at $12.42 and resumed its long-term downtrend.

New All-Time-Low During March Meltdown: In the early stages of retreat in the broad market in 2020, the issue was able to hover in the area of its all-time low in February, falling to $3.60 and ending the month at $3.77.

Once that low was breached in March, The Container Store Group swooned to $1.80 In March and ended the month at $2.36. Investors looking for a bargain had multiple chances to purchase the issue in April and May under $2, as their lows were $1.93 and $1.87, respectively.

The Container Store Group Follows Broad Market Higher: The issue participated in the broader market rebound, with incremental gains off its monthly closing low in April ($2.10), a climb to $2.85 in May and a reach to $4.25 at the end of the August.

The pace of the rally accelerated in September, with the stock ending the month at $6.21.

The Container Store Group reached a two-year high earlier in Wednesday's session when it peaked at $11.88. That high coincided nicely with its October 2018 high of $11.62.

Sell The News After Q2 Beat: After the close Tuesday, the company reported a huge second-quarter EPS beat of 33 cents along with a sales beat of $31.75 million, and the company announced plans to launch an exclusive product line with professional organizer Marie Kondo in January 2021. 

In after-hours trading, The Container Store Group peaked at $12.26, but could do no better than $11.88 on Wednesday after major buyers off the open turned into major sellers.

As of noon, the issue had sliced through Tuesday’s close ($10.05) and found support in a familiar area.

After bottoming on Monday at $9.09 and $9.04 on Tuesday, the swift decline has found buyers at $9.08 and is now attempting to distance itself from that area.

The stock was trading down 9.25% at $9.12 at the time of publication. 

The Container Store Group Moving Forward: The issue is not that widely followed by Wall Street analysts, with only one initiation and two ratings changes, all by Goldman Sachs, since July 2019. Interestingly, the firm initiated with a Sell rating in July 2019, when the issue was trading at the $6.50 area; upgraded to Neutral in October; but then went back to the dreaded Sell rating on Aug. 4 and raised its price target from $2.25 to $3.

That turned out to be not such a good call, as the issue posted a return of 269 percent since its Aug. 4 close to Wednesday's peak of $11.88. 

A potential sell-side upgrade may be the only catalyst on the horizon until The Container Store Group reports third-quarter earnings in February.