Do Retailer Stocks Point to Holiday Winners?

Retail

Published: November 27, 2012 6:24 am

Holiday retailers fall into at least two groups so far this year. One group includes companies that face low expectations. Best Buy Co. Inc. (NYSE: BBY) and JCPenney Co. Inc. (NYSE: JCP) belong in this category. The expected winners include long-time successes, particularly Wal-Mart Stores Inc. (NYSE: WMT) and Amazon.com Inc. (NASDAQ: AMZN). The movement of the stocks of these companies tells, at the very least, the combined opinion of Wall St. and its analysts about those that have overperformed and underperformed.

If traders are correct, Amazon should post big Christmas season results. Shares in the world’s largest e-commerce company have risen from $328 five days ago to $344. Data from research firm Comscore lists Amazon.com as the top online retail destination, so the rise should be expected. Walmart shares, on the other hand, have struggled a little, up from $68 five days ago to just below $70.

The shares of Walmart’s primary rival, Target Corp. (NYSE: TGT), have had a particularly rough time of it. Target shares have traded flat at $63. Analyst calls and wider trader opinion must indicate that Target has been wedged between Walmart and smaller rivals — or that Amazon has stolen significant business from it online. Shares in another big-box retailer, Costco Wholesale Corp. (NASDAQ: COST), have also underperformed, up only a bit more than a dollar in the past five days to $96.26.

Surprisingly, shares in what is generally considered the best-run department store company, Macy’s Inc. (NYSE: M), actually are down over the past five days, dropping from $41 to $40. Shares in weakling JCPenney have not surged, but they have outperformed Macy’s, having risen from $16.75 five days ago to $17.23. As might be expected, shares in another poorly run chain in the department store sector, Sears Holdings (NASDAQ: SHLD), have fallen from $49 to $47. Almost no one anticipated one of the worst performing companies for the past several years would suddenly do well.

And, finally, the most maligned large retailer in the United States, Best Buy, has held its poor position with traders, despite some evidence that its online operations did well over the weekend. Its stock dropped from $14.14 five days ago to close at $12.48.

In a few weeks, investors will know if the smart money that pushed these retail shares up or down was right.

Douglas A. McIntyre

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