Displaying items by tag: stocks

(New York)

Retail has had a great year, but looks to be facing headwinds moving forward as executives and analysts have all downgraded forecasts for the sector. However, one area of retail that looks to remain very hot are off-price stores, or discount retailers. Such retailers are seen as largely immune to ecommerce because of their treasure-hunt experience for customers and their high turnover model, which makes them less susceptible to online retailers. Accordingly, they held up well even during retail’s rout. One stock that looks likely to do well now is Burlington Stores. The reason why is that it is behind leaders TJ Max and Ross in that it has not yet optimized its operating model for the current environment, but is beginning to. This is not reflected in its stock, which means it has a great deal of upside.

FINSUM: Retail is one of the sectors we feel we have special insight into, and we definitely agree that off-price stores are going to hold up well moving forward.

(Washington)

There has been a lot of speculation that the midterm elections could cause a big problem for markets. If the Democrats sweep into congress, causing a major power shift, many worry markets might crumple. However, the reality is that the most likely outcome—a blue House and Red Senate—would actually be bullish for stocks. One analyst who specializes in political-driven investing says that investors would be relieved to have a split Congress. If somehow both chambers go blue, then there would likely be a selloff in bonds, stocks, and the Dollar, but even that might prove a buying opportunity as Democrats “are not unified around anything”.

FINSUM: Depending on the election’s outcome, different sectors are going to see different results, as some are blue-positive (like auto suppliers, homebuilders, hospitals etc), while others are red-positive (like biotech, banking, credit cards, and defense).

(New York)

Here is a proposition. What if you could have stocks in your portfolio that help you earn income, combat rising rates, and support you during a recession. Look no further than this group of rising dividends stocks that should perform very well in a recession. All three are medical device makers with wide moats and long growth runways that shouldn’t be thrown off path by an economic downturn. The three are Johnson & Johnson, Medtronic, and LeMaitre Vascular. The first two companies are aristocrats and have increased their dividends steadily for over 40 years.

FINSUM: These are interesting choices. Medical device makers do some like good recession-time bets because healthcare demand should hold up nicely in any downturn.

(New York)

As the ten-year anniversary of the last crisis has arrived this month, it is a fitting time to be thinking about what might cause the next one. In fact, many investors, professional and retail alike, are fairly obsessed with calling the next big blow up. But what might cause it? While trade war and political strife grab a lot of headlines, the real driver of the next crisis will be the Fed. The two big worries on that front are rising rates, but perhaps even more worryingly, its shrinking balance sheet. Crises have historically happened when money supply grew tighter, and that is what is occurring right now.

FINSUM: The markets have never been through the winding down of a major QE program, so it is hard to foresee how this may playout. Logic says that the next big blowout will probably be tied to the end of easing.

(New York)

Retail stocks have had a very good run over the last year. The first half of 2017 was about as bleak as it could get for retail, which is in the midst of a major disruption caused by ecommerce. However, stocks posed a big rebound over the last twelve months on the back of consumer spending and tightened business models. However, the sector might be set for more trouble as Wall Street analysts have just downgraded about 60% of the S&P’s retail index, giving profit warnings despite good consumer spending. One analyst summed it up this way, saying “The pendulum swung too far: retail never died, but it’s likely not as healthy as people think, either … After a very strong first half, it would seem management teams feel the need to reset the bar, to bring hype back to reality”.

FINSUM: The truth is that the disruption of the industry is far from over and there is likely to be a lot more turmoil, perhaps especially in the next recession, when price competition gets even more fierce.