Financials

Report by 86Research

86Research recommends investors aggressively buy Futu following its 14% post-1Q26 preview selloff, arguing the decline significantly overstates temporary market-driven weakness with a US$231 price target, implying 59% upside from current levels. Analysts believe downward earnings revisions and geopolitical tensions triggered excessive selling despite strong rebounds in global equity markets since early April. According to channel checks, Futu’s user acquisition and net asset inflows have already recovered to pre-March levels, positioning the company to achieve its 2026 target of 800,000 net new funded accounts. 86Research also highlights FUTU’s dominant Hong Kong brokerage position, Southeast Asia expansion plans, strong management team, and industry-leading margins. Trading at only 11x 2026 earnings, the stock remains deeply discounted relative to historical averages and peers.

Consumer Staples

Report by Quo Vadis Capital

Sprouts Farmers Market reported encouraging 1Q26 results, reinforcing QuoVadis Research’s bullish stance. Revenue, same-store sales, margins, and EPS all modestly exceeded company guidance and Street expectations, suggesting management has regained control after the sharp slowdown experienced in 2H25. The company also deployed all 1Q26 free cash flow toward share repurchases, buying back 1.9M shares at an average price of $73.68, with QuoVadis modeling $500M in buybacks for full-year 2026. While guidance was largely maintained, the EPS outlook was slightly raised, signaling improved visibility. At just 13x P/E and 8x EV/EBITDA on consensus 2026 estimates, the stock undervalues Sprouts’ strong ROIC-driven growth and favorable risk-reward profile.

Consumer Discretionary

Report by Quo Vadis Capital

John Zolidis continues to favour discount retailers for Q2, as persistent inflation from tariffs and high gas prices is expected to outweigh any stimulus tailwinds. Within the space, he highlights Five Below as the best unit growth story in retail, while Dollar Tree offers upside from a successful multi-price transition. Dollar General is improving execution, recovering margin and driving traffic with a lot of room to go relative to previous results. Savers Value Village stands out as a mispriced growth story at <7x EBITDA. Beyond discount, Sprouts Farmers Market should see comps recover on affordability, while National Vision remains an early-stage transformation story. Rounding out the basket are Boot Barn, supported by favourable Western wear trends, and Academy Sports, a cheap, heavily shorted name with comps turning positive.

Report by R5 Capital

Scott Mushkin argues that the era of (over) consumerism of "stuff" is waning, with major implications for the retail sector. Spurred by political rhetoric, tariff policies and reshoring efforts, he sees the deflationary tailwind of globalisation unwinding. He also cites changing attitudes, particularly among younger shoppers, embracing second-hand goods over big-box retailers, and how uniquely American it is to have so many physical goods that 80% of all self-storage units are in the US! While this signals headwinds for the majority of retailers, Scott sees upside in the “Make America Healthy Again” movement, underpinning his bullish view on Sprouts Farmers Market, United Natural Foods and Natural Grocers.

Consumer Discretionary

Report by Quo Vadis Capital

John Zolidis updates his best Long and Short ideas in Retail and Restaurants to start Q2. This follows a successful first quarter, where his average Short fell 11%, while his average Long was flat. Both compared favourably to his universe, which was down 6%, on average. The key change this quarter sees John turn bearish on TXRH as the business decelerates, margins inflect negatively and consensus forecasts appear too high. Compounding matters, the shares also trade at a premium to historical levels. Additional Short ideas include Cava, Dollarama and Tractor Supply, while on the Long side, he continues to be bullish on names such as Ollie's Bargain Outlet, Sprouts Farmers Market and Walmart.

Consumer Discretionary / Staples

Report by Quo Vadis Capital

John Zolidis reviewed 18 unit growth stories in the consumer space, breaking out the value of the existing business from the implied value of the growth option. He then calculated the value of future unit growth using a store level DCF. He compared the implied value of the growth option in the first exercise to expected value creation from store growth in the second. From this John solved for where the market was paying the largest premium to the value of future growth and where growth could be purchased at a discount. The most interesting names on the long side were Academy Sports & Outdoors, Luckin Coffee and Yum China. Sprouts Farmers Market still looks very cheap even after +50% move YTD. Investors are paying the biggest premium for Dollarama, Chipotle and Dollar Tree.

Consumer Staples

Report by Quo Vadis Capital

What really jumps out here is the disconnect between results, guidance and how analysts are modelling the company. 1) Consensus EPS for 2024 is $2.78, below revised guidance for 2023 of $2.77-$2.81. 2) The Street is modelling EBIT margins down every year going forward. 3) Analysts are modelling ~2% annual comps going forward despite the benefit of more immature stores entering the base and compared to the 3.9% comp produced in 3Q23 on top of a 2.4% increase last year. John Zolidis wonders if analysts have any credibility here. SFM has beaten estimates for 17 consecutive quarters, the stock is up over 30% YTD and zero analysts are recommending it.

Consumer Staples

Report by Quo Vadis Capital

SFM has now exceeded analyst estimates for 15 consecutive quarters with the average EPS beat of $0.11 representing ~30% upside. The stock trades at less than half the multiples the market is granting investment-banking darling Grocery Outlet even though SFM boasts dramatically better margins, returns and FCF with an identical unit growth rate. John Zolidis estimates that the average store generates over $2.5m in cash p.a. As the store base grows, so will earnings and cash flow and he believes this will occur at rate well above what is currently discounted in the shares and bearish expectations. 17 analysts cover SFM, yet only 1 has a Buy rating vs. 6 Sell ratings. Short interest is 16%.

Consumer Staples

Report by Quo Vadis Capital

38% of sell-side analysts have the stock as a Sell. The short interest is 15%. Yet, the company keeps beating estimates (now nine quarters in a row). Analysts wrongly believe SFM is a story about price and the company will have to give-in to using margin-eroding promotions to drive comps. In reality, SFM is a merchandising story. The concept works by having a differentiated assortment and attracting customers looking for a different shopping experience. Under new management traffic is improving for the first time in years. New units are going to be higher ROIC. The company bought back 7% of shares last year. Stock trades at 12x P/E.