Sell Samsara (IOT) and Dutch Bros (BROS)
With the market looking iffy, the Fed on tap next week and a new Issue slated for Wednesday, I’m going to reduce our exposure a little today by selling Samsara (IOT). I like this stock and the opportunity for it to do well remains. However, shares have been suspect since the Q2 earnings report and with over 50% of the business exposed to transportation, construction, and retail and wholesale trade it won’t take a lot of imagination for investors to come up with a growth-challenged thesis for IOT in the coming quarters. The primary counterargument to that is that IOT’s products help slash their customers’ costs, and management is seeing very strong sales conversions. Still, in the current environment, the more bearish argument may just win. I expect we’ll be back to IOT, but at the moment let’s step aside. SELL
Dutch Bros (BROS) is trading near support and looks susceptible to further weakness given very little sustained momentum since it came public. I had thought we had a potential good entry point in mid-July (and we did for a while) but the disappointing results in the last quarter and concerns over wage hike pressures (BofA says BROS could see as much as a 2.3% margin hit from California wage bill (Fast Act)) have kept a lid on shares. This is another name we could easily return to. But as with IOT, I think it’s best to step aside now and have a little more flexibility heading into next week. SELL
