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3 Ravaged Retail Stocks to Sell Now

Retail stocks continue to look ugly, but these three stocks have been completely ravaged

By Anthony Mirhaydari, InvestorPlace Market Strategist

Retail stocks were under serious pressure Tuesday morning after Macy’s Inc (NYSE:M) issued a profit margin warning. This continued the bad news for the brick-and-mortar space as, Inc. (NASDAQ:AMZN) increasingly captures consumer spending wallet share.

3 Ravaged Retail Stocks to Sell Now
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Furthermore, all of this comes amid an overall stalling of retail sales economy-wide as post-election ebullience and a strong job market hasn’t translated into higher sales and an acceleration in wage inflation.

The SPDR S&P Retail (ETF) (NYSEARCA:XRT) is declining to critical two-month support near $40, threatening a breakdown to levels not seen since early last year.

Here are three retail stocks to avoid amid the carnage:

Ravaged Retail Stocks: Macy’s Inc (M)

Ravaged Retail Stocks: Macy's Inc (M)

Macy’s Inc (NYSE:M) stock is falling to fresh lows, as it tests $22 for the first time since the summer of 2011, and reaches for a loss of more than two-thirds from its 2015 high of $68.82.

During its investor meeting, M management warned that profit margins for fiscal 2018 could be upwards of 0.8%, which is below prior guidance issued in February.

What’s to blame? Liquidation of excess inventory — clearance sales baby! — as product sales at planned prices are coming in too slow. Meekly, Macy’s CEO Karen Hoguet said there is a place for both Amazon and Macy’s to succeed. But M stock investors aren’t buying it.

Ravaged Retail Stocks: Target Corporation (TGT)

Ravaged Retail Stocks: Target Corporation (TGT)

Target Corporation (NYSE:TGT) is falling back below its 50-day moving average as it continues to struggle with tepid traffic and sales trends, as well as a loss of momentum following the implementation of its grocery initiative a few years ago.

Management is looking to invest in store updates to generate fresh excitement in TGT, but investors aren’t interested: Shares are down more than 31% from their early 2016 high.

Target will next report results on Aug. 16 before the bell. Analysts are looking for earnings of $1.05 per share of TGT stock on revenues of $15.99 billion. Back on May 17, the company reported a 1.3% decrease in comp-store sales driven by declines in both traffic and basket size, while overall revenue fell 1.1%.

Ravaged Retail Stocks: Nordstrom, Inc. (JWN)

Ravaged Retail Stocks: Nordstrom, Inc. (JWN)

Nordstrom, Inc. (NYSE:JWN) shares are threatening to fall through critical support at its May lows reach closer to $40, worsening a 35% decline from its late 2016 high and a 45% decline from its early 2015 high. Watch for a drop in JWN stock to its early 2016 low near $34, which would be worth a further 15% decline from here.

Nordstrom will next report results on Aug. 10 after the close. Analysts are looking for earnings of 61 cents per share of JWN stock on revenues of $3.7 billion. Analysts at RBC Capital Markets lowered their target following the reporting of disappointing Q1 results on May 17 amid a slowdown in comp-store sales and merchandise margins.

Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers.

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