Displaying items by tag: retail

(New York)

Walmart has taken a pounding this year. The stock is down 8.4% even though it has seen solid earnings performance. The reason why? Shares first got beat up early in 2018 when investors worried its digital strategy wasn’t taking hold. Then in the middle of the year worries about margins cropped up. Finally, in November, shares saw losses even though Walmart beat earnings and raised payouts. Interestingly, the shares were a counterpoint to the rest of retail, which saw gains for much of the year.

FINSUM: We think Walmart is a great buy. It has good same store sales momentum and its ecommerce operation is growing rapidly. This seems like a good buying opportunity to us, especially as the brand sells consumer staples, which will hold up even in an economic downturn.

(Portland)

A lot of investors may be looking for stocks with good value at the moment. Stocks that are badly beaten up, but have good underlying businesses, can be prime buys during adverse market conditions. With that in mind, take a look at Nike. The sportswear giant has shed 16% this quarter and will release earnings later today. Investors’ skepticism will either be proven correct, or wrong. The thing is, the core business looks compelling. The company gave guidance in September that it was expecting currency-neutral revenue to grow 9%. One analyst summarized the stock this way, saying “buy Nike into earnings. Nike sales are gaining momentum and the company is gaining market share across channels and geographies.”

FINSUM: Nike has done an admirable job catching up to rivals recently, as well as in passing on rising costs to consumers. Our instinct is that this is a good buy.

(New York)

Retail is in midst of its biggest selloff since the Financial Crisis. Stocks in the sector have not fallen this hard, this fast, since 2008, and that includes the 2017 panic in retail. Retail stocks had been swept up in a sort of cautious optimism this year that had allowed them to see gains. However, they have gotten caught on the wrong side of fears over the economy and trade war, falling a whopping 17% this quarter alone. The big tumble comes despite a quite bullish Christmas sales forecast.

FINSUM: Retail has a lot of problems facing it right now. Outside of the well-known threat of ecommerce, there is also rising labor costs which are pinching margins at the same time as revenue is getting tighter.

(New York)

Retail stocks have seen management boost outlooks recently, but that hasn’t helped prices, which have been falling to end the year. However, despite headwinds in the sector, there are a handful of retailers that look likely to see good performance in the near term. Those stocks are Ulta Beauty, Target, and Kohl’s. All three stocks are up for the year but down big in the fourth quarter. One stock analyst summarized his views this way, saying “We like these three stocks given the strong underlying consumer, not easily replicable product assortments, digital investments and innovation”.

FINSUM: These are very consumer-staple oriented, which we think is a good choice for the currently tenuous market environment.

(New York)

On the whole retail has had an okay year, certainly much better than the rough period of 2017. Lately though, stocks in the sector have been suffering. Will that change? The good news is that the initial evidence about the performance of the current holiday shopping season looks promising. Black Friday sales were strong this year, which bodes well for seasonal shopping. 165m Americans shopped in-store or online during Thanksgiving weekend, more than surveys forecasted, and the average purchase size was over $300. Department stores seemed to be doing particularly well, as foot traffic was up almost 8% over last year.

FINSUM: We think this is going to be a good holiday season for retailers, but that probably won’t be enough to convince investors that the underlying issues have been resolved.