Buy Update: Luckin Coffee

Luckin up over 33% since the Friday recommendation,
Gregory BergmanOct 06,2020,19:18

I am not always so Luckin. In fact, picking Luckin before the fraud brought my Bergman Buy Index down significantly.

Of course, it did not do near as much damage to my index as it did to the bank accounts of real and enthusiastic holders of this bitter stock. When regulators discovered that Luckin falsely increased its 2019 profit margin and revenue by booking more than 2 billion yuan of sales through fake coupons, Luckin’s stock price plummeted more than 95%. Consequently, Luckin “chose" to delist and now it trades as a penny stock on the over-the-counter market.

Of course, we know the story of Luckin, so no need to revisit the details of the company's distasteful lapse in ethics.

As I said in my weekly report last Friday, Luckin has a lot to answer for and a lot of work to get investors to trust it again. But all that said, they could still be the biggest liars on Earth and the stock would still be undervalued as of Friday. Buzz was brewing about taking a chance again on Luckin on Wall Street over the last few weeks. Still, many analysts say no.

Feeling Luckin, I said yes. The stock (OTC: LKNCY) has risen now 33.23% to around $4.43 per share as of midday Tuesday. I don't know if Luckin will ever make good on its promise to become the Starbucks of China, but I do know that this stock is one to watch if you haven't bought and sold already.

Other stock picks from last week included cruise liners Carnival Corp. (NYSE: CCL), Royal Caribbean (NYSE: RCL), and Norwegian Cruise Line (NYSE: NCLH). Since the buy recs, Carnival has risen from $14.26 to $15.84; Norwegian has risen from $16.28 to $17.94 after hitting $18.11 today; and Royal Caribbean has risen from $62.50 to $69.06 per share.

So, where do I stand this week?

I am long on cruises, but no-so-long on Luckin. Hop aboard the cruise stocks, and see what Luckin does when it makes its next pop.

Topics:Luckin Coffee, Luckin, LKNCY, China, Fraud,