It’s August, and you have school-age children, you know what that means: Pretty soon the school bells will be ringing, and the kids will be back in school.
Before that break from the summer blahs, however, we parents have some work to do. The little ones will need new pencils, backpacks, shoes and a host of the most up-to-date electronic gadgets to help them stay competitive in the current education system.
If the fundamental grades of the larger retailers are any indication, it’s not going to be a great season as most of the big back-to-school stores like Walmart (WMT), Target (TGT) and Sears Holdings (SHLD) are pretty bad right now. In fact, Portfolio Grader ranks Sears and Walmart “sells” while Target is just a “hold.”
To make money this back-to-school season, investors will need to take a different approach.
Remember when kids took pencils, pens and paper to school? OK, they still do — but to a much lesser extent than they used to. That’s because today’s kids increasingly need technology to stay competitive, and this will only increase as they get older. This year’s back-to-school list is going to include desktop computers, laptops and tablets. A smartphone might be on your list as well to help stay in touch with your child during the school week.
For many consumers, the one-stop shopping destination for computing and calculating devices will be Best Buy (BBY). This company had a horrid holiday season last year, but business has steadily improved in 2013 and the fundamentals are getting better just as we enter back-to-school shopping. Two weeks ago, BBY was upgraded to a “B” and remains a “buy”-rated stock in Portfolio Grader.
Avery Dennison (AVY) is entering the key back-to-school season in a strong position. You might not think of this company as a traditional school-shopping stock, but it makes the packaging of many products you will be buying this year (including the label on the liquor bottle for that drink you’ll need when you finally finish shopping). Avery’s tapes and adhesives are used in computers, smartphones and other things you will be buying this month. Business has been improving Avery Dennison, and that has been reflected in its Portfolio Grader rankings. The stock was upgraded to “B” last year and remains a “buy” in our rankings.
Consumers are being more cautious as the economy still is struggling to gain momentum, so back-to-school shopping might not be the bonanza it used to be for these stocks. However, by focusing on those companies with the best fundamentals and that have exposure to the products that consumers need for their kids, back-to-school shopping still can be a profitable investment theme.
Louis Navellier is the editor of Blue Chip Growth.