Retail Stocks – Are Earnings Growing on
Cyber Monday?
The Dynamic Wealth Report
November 29, 2010
This weekend, Linda and I started decorating for the holidays. It’s far
from a quick hour or two project. I imagine we’ll spend the better part
of a week putting up Christmas nick-knacks all over the house. We still
have to find stockings for the horses and dogs…
At least the tree is up and the lights are on… Let’s just hope the dogs
don’t pee on it.
While we decorated and listened to classic holiday music, I started
thinking about Christmas. I suddenly felt overwhelmed, and not in a good
way. I haven’t made a list… I haven’t thought about gift ideas for
family or friends… Who am I even buying gifts for this year? I’m way
behind the curve already!
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Luckily, I have Cyber Monday to figure it out…
For those of you who don’t know, today is Cyber Monday. It’s the biggest
day for online-shopping in the world. The term was coined a few years
back. Cyber Monday… really took off as online stores became easy to use…
and workers could utilize the high speed internet connections at the
office. Today – Monday – when everyone returns to work and fires up
their computer… they’re not really working.
They’re shopping!
The Friday after Thanksgiving is always a big shopping day. It’s known
as “Black Friday”, not because the day was ominous… but because the sales
on that day often pushed a retailer’s financial numbers into the black!
Now Black Friday is the starting gun for the crazy holiday shopping
season.
Customers are lining up at the doors waiting to grab huge deals early
Friday morning. I have to admit, on Black Friday I did a little bit of
shopping in San Francisco’s Union Square. If you’ve ever been in that
area, you’ll know what I mean when I say it was a madhouse.
People were packed in 8 to 10 deep on the sidewalks.
Shopping bags and kids in strollers were everywhere.
Macy’s and Williams Sonoma were packed.
Despite my spin through the shopping district, I failed to pick up
anything… for anybody. I’ll be spending part of today searching the
bowels of the internet for gifts… and gift ideas.
I won’t be alone. Some estimate spending today alone will top $1
billion.
And that’s not a small number. What you need to realize is Black Friday
and Cyber Monday may impact you directly. If you own any retail stocks,
you might see them move higher in days ahead.
See, initial reports about Black Friday are quite positive. Retailers
say early reports show higher sales than last year… The trend is heading
in the right direction! And that bodes well for retailers… and their
stock prices.
Department stores saw a big jump in shopping activity… but that
shouldn’t come as a surprise.
I mentioned this was a possibility a few weeks back in my article “Why
You Should Stay Away From Sears Stock”. In the article, I noted
Sears
Holdings (SHLD) looks incredibly overvalued.
However, I also said, “I believe rising consumer confidence numbers mean
this holiday shopping season will be better than expected. Consumers are
tired of not spending money…”
While Sears’ stock has been falling, many other retailers are looking
strong. Macy’s (M) is hitting new 52-week highs and so is specialty
retailer Williams-Sonoma (WSM). I expect stocks like these to continue
leading the industry higher.
This is just the beginning. A strong start to the shopping season will
only lead to bigger and better sales figures as Christmas Day
approaches. And the stores showing the biggest sales gains should see
their stocks provide the biggest moves.
• Clothing & Accessories Industry (Up +12%)
The surge in holiday shopping is a godsend for the retail industry, and
the Clothing & Accessories Industry is no different. The industry is
being lead higher by companies like American Apparel (APP), up 33%, and
Carter's (CRI), up 24%.
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