Big Money Sheds Ollie’s Bargain Outlet, Should You?

Ollie’s Bargain Outlet Holdings, Inc. (OLLI) stock has slumped over the last year, losing 39.1%. The discount retailer pulled back recently on an earnings disappointment. But another likely reason is Big Money dropping the stock.

Ollie’s Bargain Outlet Sees Big Money Selling

So, what’s Big Money? Said simply, that’s when a stock goes down in price alongside chunky volumes. It’s indicative of institutions selling the shares.

Smart money managers are always looking for the next hot stock. And Ollie’s Bargain Outlet has many fundamental qualities that are attractive. But sometimes when values decline, money managers look to sell or may be forced to liquidate.

This downward movement creates uncertainty for the stock going forward. And as I’ll show you, the Big Money has been exiting the shares recently.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way. But Big Money sells too, especially when the situation changes.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals OLLI has made the last year.

We’ve seen plenty of Big Money selling activity. Each red bar signals big trading volumes as the stock price dipped:

Source: www.mapsignals.com

In the last year, the stock has attracted 16 Big Money sell signals. Generally speaking, recent red bars could mean more uncertainty is ahead.

Now, let’s check out technical action grabbing my attention:

• 1-year underperformance vs. Consumer Staples Select Sector SPDR ETF (-38.3% vs. XLP)

Vast underperformance is an obvious red flag for leading stocks.

Ollie’s Bargain Outlet Fundamental Analysis

Next, it’s a good idea to check under the hood. Meaning, I want to understand the fundamental story too. As you can see, Ollie’s Bargain Outlet has been growing sales at double-digit rates and has a good future earnings outlook. Take a look:

• 3-year sales growth rate (+12.9%)
• 2-year vs. 1-year EPS growth estimate (+48.7%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term. But when there is disagreement between the two, it could mean the situation has changed. Or it could be a huge long-term value play on a great stock.

OLLI has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has had buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis. Usually when selling dries up, great stocks rally again.

OLLI has had a lot of qualities that attracted Big Money over the years. Since 2015, it’s made the MAPsignals top list 36 times, with its first appearance on 04/12/2016… and gaining 106.7% since.

Despite the recent decline, long-term investors can consider it a winner. The blue bars below show the times that Ollie’s Bargain Outlet was a top pick since 2015:

Source: www.mapsignals.com

It’s been a top stock in the consumer discretionary sector according to the MAPsignals process. I wouldn’t be surprised if OLLI reappears on this list in the years to come. Let’s tie this all together.

Ollie’s Bargain Outlet Price Prediction

The Ollie’s Bargain Outlet decline makes the stock look oversold. Big Money selling in the shares is signaling to take notice. Given the historical gains in share price and strong fundamentals, this stock could be a huge value play long-term and still worth a spot in a diversified portfolio.

Disclosure: the author holds long positions in OLLI in personal and managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

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