Wall Street will be watching retail stocks very closely over the next few weeks, now that we have entered the heart of the key selling season of the year for most retailers.
As usual, Wall Street will be looking in the wrong places and asking the wrong questions. All the attention will be focused on the big retail stocks like Walmart (WMT), Target (TGT) and department stores like Sears (SHLD). Rather than tracking sales and margins at these companies with average or poor fundamentals, the right question is “which retail stocks are worth buying right now?”
Investors should focus on retail stocks that have strong fundamentals and institutional buying coming into the holiday season — not the ones where Wall Street is hoping sales will improve in the last five weeks of the year. And that’s where Portfolio Grader can help.
Build-a-Bear Workshop (BBW) is an example of an “A”-rated retail stock with considering. The company operates more than 400 stores where kids can build and decorate their own Teddy Bears. Kids love the place, and parents seem to find an attractive place to engage in activities with their kids at a reasonable price. Analysts have been raising their estimates for the final quarter as well as next year, and institutions have taken notice. The smart money is accumulating BBW stock, and back in October BBW was upgraded to a “strong buy.”
Kirklands (KIRK) is in the home décor and gifts industry and currently has more than 300 stores in the U.S. The company has posted four consecutive earning surprises, including a monster positive surprise of 200% in the most recent quarter. The company is showing strong total and same-store sales and is well-positioned for the holiday shopping season. The company raised its guidance for fiscal 2013, and analysts have followed by raising their estimates for the rest of this year as well as for 2014. The strong improvements in fundamentals were picked up by Portfolio Grader, and the stock was upgraded to an “A.” Kirkland shares remain a “strong buy” at the current price.
Everyone will be watching retail, but they will be watching the wrong companies. Many of the big retail stocks like Target, Nordstrom’s (JWN) and JCPenney (JCP) have terrible fundamentals and are rated as “sell” or “strong sell” right now. Use Portfolio Grader to find the retail stocks that are poised for the best year-end gains for your portfolio.
Louis Navellier is the editor of Blue Chip Growth.