Today we’re going fishing for retail stocks to buy. Though given the state of many of their charts, you could also call this adventure dumpster diving. Much of the retail sector has been garbage this year. But I’m starting to see some signs of life finally creep in.
In a world where Amazon (NASDAQ:AMZN) reigns as king, competing retailers have had to adapt or die. Their decaying price charts tell the tale, with some even diving to the single digits. But unless my eyes deceive me, I’ve stumbled across three deathly stocks that could be returning to life.
They all boast bottoming patterns and constructive price action. These are signs that signal the pond is ripe for some old-fashion bottom fishing.
Let’s take a closer look at our targets.
3 Retail Stocks to Buy: Bed Bath and Beyond (BBBY)
Bed Bath and Beyond (NASDAQ:BBBY) received a shot in the arm earlier this month on news that the ailing retailer named a new CEO. Mark Tritton, a former chief merchant for Target (NYSE:TGT) with three decades of retail experience, accepted the job, and investor enthusiasm was through the roof.
The subsequent follow-through has lifted BBBY stock above its 200-day moving average for the first time since May. The 50-day and 20-day averages are trekking higher to confirm both the short-term and intermediate-term trends are bullish. While some backing and filling may be in order after such a strong run, this is the strongest Bed, Bath and Beyond’s price chart has looked in a while.
As long as BBBY stock can hold the gap area near $11.50, bulls hold the upper hand.
3 Retail Stocks to Buy: Urban Outfitters (URBN)
Since peaking last year at a lofty $52.50, Urban Outfitters (NASDAQ:URBN) shares have been crushed over 50%. But massive rallies and crashes aren’t new. The past five years have been a roller coaster ride pushing the stock between $20 and $50 over and over again.
Spectators waiting for signs that URBN stock is bottoming and perhaps ready for its next ascent are taking note. The stock has completed a rounded bottoming pattern and rallied back to the topside of its 200-day moving average. The rising 20-day and 50-day moving average are emboldening buyers and bringing trend-followers to the yard.
While the next earnings announcement could potentially spoil the party, the price chart is saying bulls now deserve the benefit of the doubt. A break below $26 support would change my tune, but until then, the path of least resistance is higher.
3 Retail Stocks to Buy: Kohls (KSS)
I had to plug my nose before putting Kohls (NYSE:KSS) on the list, but it has built a solid base to launch from … if buyers return. The six months of consolidation have digested May’s disastrous earnings gap, and the recent rally has returned KSS stock to the upper end of the rounded bottom.
We need to clear resistance at $54 before bull trades are a go, but if we do, KSS has plenty of room to run before filling the mid-year down gap. So that’s the level would-be buyers should focus on. Breaking $50 support would signal the stock needs more time before mounting a sustained comeback, so all bets are off if we trade below it.
The next earnings report is slated for mid-November and could provide a catalyst for its next big move.
As of this writing, Tyler Craig didn’t hold positions on any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here!