by James Brumley | November 26, 2012 3:29 pm
To be blunt: I’m not impressed by Cyber Monday’s stats and I’m certainly not interested in stepping into any particular stocks because of the digital phenomenon.
I see it as nothing more than a lot of noise that garners investor attention, but doesn’t actually do anything to bolster portfolio values. As such, it’s not worth trading — even if you’re sure you’ve found that one stealthy Cyber Monday play nobody else found.
I’d be surprised if you weren’t surprised to hear that. I’ve yet to see a news site today that didn’t suggest a stock like Blue Nile (NASDAQ:NILE), Amazon (NASDAQ:AMZN) or eBay (NASDAQ:EBAY) as a way to take advantage of the swelling number of online shoppers.
But I have to call it how I see it … and what I see isn’t anything to get excited about.
To be fair, there was a time when Cyber Monday mattered.
The term began back in 2005, stemming from the surge in e-commerce traffic that started to become evident the year before. Back then, Cyber Monday was a huge deal to some e-tailers — the select few shopping websites out there — and nothing to the many with no e-commerce presence.
Though e-commerce had been around for a few years, it was a venture that most brick-and-mortar retailers had largely ceded to the likes of Amazon, as the complicated fulfillment and delivery process was more than most traditional retailers were capable of piecing together.
As such, the few companies that could give online shoppers just a decent shopping experience — even trainwrecks like Overstock.com (NASDAQ:OSTK) — managed to snag more than their fair share of the online shopping business.
As is always the case, where there’s money to be made, businesses will figure out a way to get it. That’s what we’ve seen unfurl since 2006 or so, as most traditional brick-and-mortar names have either built an e-commerce presence or re-built a better online-shopping experience.
Bon-Ton Stores (NASDAQ:BONT) is an example of the former; it didn’t offer online shopping until 2007, but since developed it into a major portion of its top line. Nordstrom (NYSE:JWN), on the other hand, went online with its web-shopping service in 2001, but recently spent three years developing new e-commerce it unveiled in 2010 — arguably one of the best in the world.
And it’s not just a select few retailers doing e-commerce bigger and better. Target (NYSE:TGT), Amazon, Macy’s (NYSE:M), Kohl’s (NYSE:KSS) and more have joined in. Even Walmart (NYSE:WMT) — the behemoth of bad customer service — has upped its online game, toying with same-day delivery, paying online with cash and in-store pickup.
While it’s true that nearly every retailer is doing more online business than ever before, most of them are just as apt to cannibalize their in-store sales as they are to win business from competitors.
Now that (nearly) everybody’s doing it — and doing it pretty well — names like Amazon that used to thrive on Cyber Monday are no longer something special. And their stocks shouldn’t be either.
That being said, I don’t want to completely deflate anyone’s hope for trading a holiday-shopping bump in online sales. The challenge is simply to find an e-commerce business that’s going to unexpectedly benefit from digital shopping more so than its competition — above and beyond a big Cyber Monday.
To that end, two names do look promising: Blue Nile and Walmart.
Like I said, jewelry-seller Blue Nile admittedly is an obvious cliché Cyber Monday pick. But, as the only high-end-esque jeweler with a strong online-only presence — and as one backed by historically solid results — the fact that it has fallen out of favor over the course of 2012 might have set up an interesting Q4 earnings upside surprise.
As for Walmart — no, I don’t think Walmart does e-commerce better than Amazon, Target or any other competitor. But I do think Walmart has quietly been improving its online shopping experience and hasn’t gotten enough credit from the market for its effort.
The upside of that could show up when fourth-quarter numbers are unveiled — assuming Walmart makes a respectable dent in Amazon’s business. That’s hardly exclusive to Cyber Monday, of course, but like I said: Cyber Monday really doesn’t matter.
James Brumley does not have position in any of the stocks mentioned in this article.
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