We’ve opened a new bullish trade on Nordstrom, Inc. (NYSE:JWN). JWN soared higher in late February when the company announced it did something we haven’t seen many companies do during the past few years.
Nordstrom beat Wall Street revenue estimates by $30 million and saw same-store sales growth of 4.7% in the fourth quarter. The typical earnings story we’ve gotten used to is a revenue miss accompanied by an earnings beat due to cost cutting and creative accounting. However, Nordstrom is bucking the trend and is proving it can get more consumers into its stores. This is a good thing. Once you’ve got top-line growth figured out, it’s much easier to work on trimming the income statement to improve bottom-line earnings.
Since JWN’s earnings beat, the stock has been consolidating. But, with the recent FOMC meeting results, it looks like Nordstrom is starting to break up and out of its consolidation range. We are expecting JWN to continue the longer-term uptrend it has been in by breaking above its previous highs just below $82 — giving us a short-term price target of $84.
Buy to open the JWN July 82.50 Calls (JWN150717C00082500) for a maximum price of $3.00.
We are going with a July expiration because the April expiration is too close, and the May and June expirations aren’t available for trading yet. This should give us plenty of time to watch this trade develop as we move slowly toward the company’s next earnings announcement on May 14. We plan to be out of this trade in Nordstrom well before that time though.
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