This week, major US retailers will be reporting results for the holiday quarter, which for most companies ended on January 31. Aside from the Nordstrom / Ivanka Trump silliness; we need to ponder as to where Americans are shopping and what are they buying. Here is what I am forecasting:
- Apparel, as I have been writing about ad nauseam for a long time is in a bear market. This is affecting both the producers and retailers.
- Mall traffic is lousy. This fact not only impacts those aforementioned apparel retailers but the anchor stores like Macy’s (M), Nordstrom (JWN), JC Penney (JCP); as well as everything in walking distance in between.
- Anything having to do with home repair and maintenance is strong. However, when you look at stocks like Home Depot (HD), Lowes (LOW), Scott’s Miracle Gro (SMG), and Sherwin Williams (SHW); this fact may already be in the numbers. I would also caution that a relatively mild winter may negatively impact some comps. Then again, a rainy winter in California and Nevada may make up for some loss due to lack of snow elsewhere. All said and done, welcome pullbacks in these stocks to begin to nibble.
- The automotive parts / specialty retailers look interesting. I expect solid results with a sell-on-the-news reaction which could provide opportunity.
Last week Kraft Heinz (KHC) made an unsolicited takeover offer for Unilever (UN). UN rejected the overture and then KHC pulled the offer over the weekend. Nothing ventured nothing lost for anyone who did not jump on the UN bandwagon. Never chase an unsolicited takeover offer. I used the pullback in Mondelez (MDLZ) to begin a position in our Restaurant & Food Chain portfolios.
Some housekeeping items:
- I forgot to link to my recent Bloomberg radio appearance on February 6, so here it is. I discussed our short position in Chipotle Mexican Grill (CMG).
- Then this Wednesday is the annual Jim & Judy O’Brien Financial Markets Colloquium at Seton Hall University. We have another great lineup of speakers. I hope you can make it. Let me know if we can expect to see you.
- Finally, next Monday, February 27, I am speaking at The Money Show’s Traders’ Expo at 3:30 PM. The event is free and lasts from Sunday through Tuesday of next week. Again, I hope to see you there.
Overnight futures are rising as the markets continue their ascent into uncharted territory. Don’t try to call a top. We will know when it is the right time to lighten up but that might not come for a few weeks.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long MDLZ and short CMG — 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
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