Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investors, You Need to Stick with the Cheap Retailers

Companies / Sector Analysis Jan 19, 2013 - 09:49 AM GMT

By: InvestmentContrarian

Companies

George Leong writes: The retail sector continues to show decent growth, which is encouraging given the lack of strong jobs growth. The improvement in the housing market is helping to add some confidence to consumer spending and the retail sector. Retail sales in December grew 0.5%, above the 0.4% estimate made by Briefing.com. On an ex-auto basis, sales grew at 0.3%, which was the same as November, but below the Briefining.com estimate of 0.5%.


Retail sales in December, comprising 22 retailers polled by the Thomson Reuters Same-Store Sales Index, increased a slightly better-than-expected 3.4% versus the estimate of 3.3%. (Source: Wahba, P. and Skariachan, D., “December retail sales up, but discounts hurt profits,” Reuters, January 5, 2012.)

The results in the retail sector are decent but not stellar, as there’s still a hesitancy to spend, at least at non-discounted prices.

lululemon athletica inc. (NASDAQ/LULU) fell nearly four percent on January 10 after the fashionable maker of athletic clothing made a downward revision in its sales guidance.

Discounter Target Corporation (NYSE/TGT) reported flat sales in December, which is a disappointment, given the hope placed on the holiday shopping season, when some retailers can generate up to 40% of total annual sales.

I believe the department stores and some of the specialty retailers will fare well. The key to success in the retail sector is selective picking. I would stay away from J. C. Penney Company, Inc. (NYSE/JCP) as the company tries to restructure out of its mess.

My advice is to continue to stick with the leading discount bellwether retail stocks. In the large-cap retail sector area, the top companies are Wal-Mart Stores, Inc. (NYSE/WMT), Target, and Costco Wholesale Corporation (NASDAQ/COST).

The king of the big-box stores continues to be Costco, which reported a stronger-than-expected nine-percent jump in its key same-store sales reading in December. (Source: “Costco December same-store sales up 9 percent,” Reuters, January 3, 2013.)

Costco’s stock chart below is a wonderful example of consistency and steady price appreciation.


Chart courtesy of www.StockCharts.com

The results continue to show steady growth; but for that extra bit of growth, you should look at the smaller discount companies in the retail sector.

Costco, for instance, has a market cap of $44.0 billion and is estimated by Thomson Financial to report sales growth of 7.4% and 8.5% for the 2013 and 2014 fiscal years, respectively.

By comparison, take a look at mid-cap PriceSmart, Inc. (NASDAQ/PSMT), an operator of warehouse clubs in 12 countries in Central America and the Caribbean.

Consider the comparative sales growth for PriceSmart by Thomson Financial, which is 13.6% and 15.4% for FY13 and FY14, respectively—higher than Costco. The growth estimates are probably conservative and could really take off if the expansion continues.

The chart below shows a plateau and sideways trading. Be careful of the downside risk.


Chart courtesy of www.StockCharts.com

Another interesting discounter is large-cap Dollar General Corporation (NYSE/DG), which operates over 10,000 stores across 40 states. For investors looking at the retail sector, Dollar General has reasonable valuation and above-average long-term price appreciation potential.

And when the housing market and job numbers pick up, I expect spending in the retail sector to continue to increase, especially on non-essential goods and services.

My favorite in the retail sector continues to be the discounters and big-box stores. The big-box stores are now selling a broad range of electronics, and they are adding to their product line, offering consumers a one-stop place for shopping and creating higher revenue flow.

Source: http://www.investmentcontrarians.com/recession/you-need-to-stick-with-the-cheap-retailers/1259/

By George Leong, BA, B. Comm.
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

George Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. See George Leong Article Archives

Copyright © 2013 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Investment Contrarians Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in