GameStop(NYSE:GME) isn’t the only old-school, brick-and-mortar retail company that could use a boost to its share price. There are plenty of other retail stocks out there that would love to see a massive run up in their share price with the help of the r/WallStreetBets crowd on Reddit.
Many retail stocks have long been neglected by investors and a lot of them are also the target of short sellers who are betting that the share price will drop. Getting some attention for the following four stocks would be welcome.
Just be sure to be careful and disciplined if one of these securities becomes the target of the r/WallStreetBets crowd.
“If we assume (for the sake of argument) that the short-term payoff from owning one of these securities is a coin flip, then we need to be comfortable taking some profits when we are lucky enough to be on the winning side,” says Travis Box, assistant professor of finance at Clemson University. “The casino does not mind giving up jackpots because it knows that most people don’t leave the building after they win.”
Here are four retail stocks that are hoping for a boost from r/WallStreetBets:
Retail Stocks Hoping for a r/WallStreetBets Boost: Target (TGT)
Target’s stock has had a decent run over the past year, up 113% since its pandemic low last March. However, TGT stock has not had as a big an increase as more popular retailers such as Costco (NASDAQ:COST) and Amazon (NASDAQ:AMZN).
So far in 2021, Target stock is up about 8% at $191 a share. The company still pales in popularity next to its biggest rival, Walmart (NYSE:WMT). A push higher from the Robinhood crowd would be welcome at this point.
And, unlike many of the struggling stocks pushed higher in recent weeks, Target has a solid balance sheet and a history of profitability. The company’s financials are sound. For its fiscal third quarter ended on Oct. 31, Target’s same-store sales rose 20.7% from the same period of 2019. The sales increase led to Target’s profit in the quarter growing by 44% to $1 billion.
Target also pays a quarterly dividend of 68 cents a share and has increased its dividend payments for 49 consecutive years. That’s a lot to like when it comes to TGT stock.
Best Buy (BBY)
Critics of GameStop liken the company’s business model to the outdated Blockbuster. GameStop is a retailer selling hard copies of video games at a time when players are increasingly buying digital versions of video games online.
While not entirely in the same category, Best Buy is a retailer that has traditionally sold technologies and other items that are increasingly moving to digital versions online, from DVDs and compact discs to video games and related paraphernalia.
While Best Buy is still selling a lot of tech hardware such as laptops, smartphones and TV sets, the company has also had to begin selling household appliances such as refrigerators and ovens to make-up for the lost revenue as increasing amounts of technology move online.
To some people, Best Buy is a retailer that has grown long in the tooth. BBY stock hasn’t been setting the world on fire in recent months either. The share price roughly flat since the beginning of November at its current level of $122 a share.
M stock is down about 9% over the last 12 months at about $15 per share. Five years ago, Macy’s stock was worth $70 a share.
This once-mighty retailer and its shareholders have clearly fallen on hard times. A boost from the Reddit mob could certainly help inject some life into the stale department store chain, which has announced plans to close 125 store locations by the end of 2022 due to deteriorating sales.
Macy’s has been focused on developing the e-commerce side of its business, which rose 27% in the third quarter of 2020, and management’s long-term plan is to become an “omnichannel retailer.” However, the focus on online sales can’t seem to offset the losses Macy’s suffered as the Covid-19 pandemic forced retail outlets to close and the general decline in shopping malls as consumers increasingly shop online and have items delivered to their homes.
M stock could definitely use a boost from the r/WallStreetBets crowd.
Nordstrom stock is down 6% since the end of January. At its current level of $35 a share, JWN stock could use a spark.
Like Macy’s, Nordstrom is suffering from a broad decline in retail outlets and shopping malls as consumers move their attention to online shopping. The luxury department store chain that sells clothing, footwear, jewelry and cosmetics has also been hard hit by the pandemic that shutdown retail stores for months at a time throughout the U.S.
Nordstrom was hoping it would get a bump from holiday sales in December. But sadly, the company recently reported that its sales sank further in November and December. Nordstrom reported that its sales dropped 22% during its nine-week holiday period, sending analysts scrambling to downgrade the JWN stock.
Nordstrom has been taking steps to right the ship, cutting overhead, closing 16 underperforming stores and launching new fulfilment capabilities at its off-price Nordstrom Rack outlets. However, Nordstrom’s focus on luxury items seems out of step at a time when people are working from home in sweatpants.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.