SGH - Smart Global Holdings

truedisdain · December 22, 2021, 11:57pm

SGH – SMART Global Holdings

I pulled this company from the brainstorming earnings excel file .

Mainly starting this thread for me to add onto as I continue to research the company up to earnings. Feel free to add into this if you have read anything or have any other knowledge on this company.

Who is SGH?

SGH is a semiconductor chip manufacture and we all know that we love technology shit. We have seen plenty of green days with software and hardware companies recently with the technological increase of use because of COVID.

Prior to COVID, SGH was boring as hell with only dabbling in one portion of tech (chips). Recently, as in August of 2020, Mark Adams took over as CEO and has completely changed the dynamic and direction of the company. Wanting to see the company step its foot into other areas, he decided to the CREE LED business unit from CREE (NASDAQ: WOLF). With this acquisition, he is also pumping money into R&D and are in the AI space as well.

SMART Modular | Industrial DRAM Module | Industrial Flash Product | Industrial RUGGED SSDs

This company has also been on a rip in 2021, trading at 75% growth
Jan 4th - $38.61/share
Today - $65.29/share

Previous Earnings:

Previous two earnings for SGH have been good for the company, beatings EPS both times and subsequentially jumping up their share price by 18% the following day. After the July earnings gap up, SGH then proceeded to gap back down to the pre-earnings price and range between the $42 and $50 area until the October earnings were released.

Since October earnings, they have been in an uptrend and are currently trading at its 52 week high.

JUL 21

OCT 21

In a recent interview, SGH stated that the supply chain issues we have seen in other companies are not currently affecting their business. (just something to keep in mind)

What do analysts think?

From what I have read so far, the sentiment for this particular company us bullish. Both in the short term and long term. PTs I have seen range from $75-$85 and have remained as a recommended buy for the last few months.

As I dig deeper into this company, I will be looking for the bull/bear case for earnings in January 2022 and long-term outlook.

rexxxar · December 23, 2021, 2:25am

This is a good find, bud.
Premiums aren’t bad either way too.
A straddle or butterfly can easily be profitable here.

Only 2 things I can note on the charts…

profit taking is immediate after every ER,
RSI and price divergence since November is apparent.

If supply issues are of no concern, then an even higher ATH should be easy.

truedisdain · December 23, 2021, 2:55pm

Thanks for looking at the charts Rex!

Here is the options chain for January. Seems like there is a lot of OI built up for the 50 put strike compared to the call side. Maybe this is people taking lottos/betting on a company that has grown 75% in a year to finally level out.

truedisdain · December 23, 2021, 4:35pm

Looking deeper into the options;

The 70c JAN 21 is currently at $3.20 per call at the time I am writing this and opened at $2.50 today.
3 days ago, the price of the contract was .75 cents.

This is a perfect example of how you can benefit by playing a ticker up to earnings.

I am still reading more into the company and will continue to add in

truedisdain · December 27, 2021, 10:00pm

Update: I took a small position to swing trade and ride up until earnings or until I see profit I like.

Analyst PT for SGH was updated to $100 from $75.

Option premiums are still trading pretty high, but if you got in around the time I posted this, you will be up on your call.

truedisdain · December 28, 2021, 3:45pm

Update: looks like there was some profit taking this morning from hitting $72 which is natural after the way it’s traded the last few days. If anything, we will see it consolidate the rest of this week/up to earnings.

Looking at how earnings can play out;

if earnings are crap, this can fall down to $55 or below. Since it ripped up to this current price so quickly, there is no real established support.
if earnings are good, we will see a lot more volume and a small jump intra-day with profits taken very quickly. Not expecting a 15% jump overnight since i think this is being traded with a “beat earnings” mind set priced in already.

Trade smart

truedisdain · December 30, 2021, 3:23pm

Update: I sold my position for a 35 percent gain.

What I am seeing with this stock is extremely low volume on the shares and options, which actually worked out well with bullish sentiment from analysts

I am continuing to watch this ticker through earnings.

truedisdain · January 4, 2022, 2:34am

Just an update to this thread since I am still watching this ticker.

SGH hit a high of 74.50 today, almost $10 more since the original post two weeks ago.

Earnings is set for tomorrow after market close. I’ve been seeing a little more volume on the call side but nothing significant.

Every article I have read on SGH has been bullish long term for the company, so I will be very interested in the stock reaction to their earnings call after the crazy growth it’s had recently.

truedisdain · January 6, 2022, 2:47pm

Update post earnings;

Long story short, SGH beat earnings and raised forward guidance which was what I was expecting, however the stock still had a significant drop down to $59 yesterday.

This more than likely happened for the following reasons;

The CEO announced a stock split that will happen at the beginning of next month.
With the stock having such a large percentage gain, in the recent months, it was generally overbought and some profit taking occurred, as was noted with the previous earnings reactions. Volume was over 3m when the average is

Going forward:
Outlook for SGH is still bullish long term and can be a good play to hold some shares or longer dated calls for strikes that around the pre-earnings stock price. To me, the stock split represents forecasted growth and shouldn’t be treated as bearish.

Overall:
Like I said previously, if you got in around the time this DD was posted and sold prior to earnings, you were likely in for some decent profits. This is just another point where outcome of earnings can have an adverse effect in stock price. Safest plays for earnings is to play the rise/fall leading up to it.

SGH is still on my watch list and will more than likely be entering a long position at some point.