Consider me back at the helm of My Gut Feeling. Thanks of course to my wife for help publishing My Gut Feeling during my recuperation.
Earnings season for the most part came to an end last week with a flurry of retail companies reporting results. With some few exceptions, those earnings stunk. They reflect: disruption by internet based sales, an increasingly smart consumer, a shunning of apparel by consumers and of course, The Death of the American Mall; as I have written about extensively.
Macy’s (M), once the most dominant and prominent retailer in the United States is a shadow of its former self. The stock traded down to a 6-year low last week. Target (TGT), traded down to a 5-year low. Urban Outfitters (URBN) is at an 8-year low. Etcetera, etcetera, etcetera.
The only three industry giants that remain are Amazon (AMZN), Walmart (WMT) and Costco (COST). Special mention must be given to Best Buy (BBY). Just 5 years ago, BBY was put on life support but the company has made a miraculous turnaround and is not only a survivor but is trading near an all-time high.
I owned AMZN for some time but have slowly worked out of our positions over the course of the last few months as the stock ran to new highs. As I write, we hold a few remaining odd lot shares, but by the time the Total Eclipse of the Sun occurs today, even that will be gone.
AMZN has a few issues which is giving me pause. To begin with, the recent price action has the stock trading about 11.5% below its all-time high reached last month. I am also concerned about potential anti-trust action that AMZN might face. I give the Whole Foods (WFM) acquisition a 50/50 chance of receiving regulatory approval. Jeff Bezos also owning The Washington Post, might put other pressure upon the company by regulators. Then there is Jet.com.
Jet.com is a web based shopping site owned by WMT. WMT is pouring billions of dollars of capital into Jet.com trying to unseat AMZN control over the marketplace. WMT pays a 2.57% dividend, and is trading just below its all-time high. 90% of Americans live within 10 miles of a WMT. I think for the long run. WMT, with its dividend and build-out of Jet.com is a safer play in retail.
COST has seen its struggles but will be a survivor. The stock is about 14% off its all-time high. This may be a good spot to pick up on value.
If you want to consider Apple (AAPL) a retail stock, then it should be at or near the top of your portfolio.
As I alerted readers, I was back on Bloomberg Radio last Monday. The segment was short but sufficient enough length of time in order for me to detail why Zoe’s Kitchen (ZOES) has not delivered to shareholders. Next time I will delve further into my thesis on focusing capital on restaurant application technology rather than individual restaurant stocks.
Lastly, sad news yesterday at the passing of comic genius Jerry Lewis. After the passing of Lewis and Don Rickles, the golden age of comedy has drawn to a close. Lady !!!
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL & AMZN — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
– You can email Scott at email@example.com
© 2017 LakeView Asset Management, LLC. All rights reserved.