Daily Gains Letter


Retailers sell products or services directly to consumers. These items are purchased from the manufacturer or wholesaler and sold to the end user at a marked-up price. Wal-Mart Stores, Inc., for example, is a well-known large chain retailer. Another example of a retailer would be the small family-operated corner store.

When investors look at retailers they consider trends, sales per square feet, expansion efforts, inventory levels, same-store sales data, and the ability of the retailer to generate brand awareness and brand loyalty.

Overall, retailers are an economic indicator of consumer spending. Consumer spending accounts for roughly 70% of gross domestic product (GDP) growth in the United States. Therefore, if consumer spending is up, it is a sign of economic strength. When retailers are reporting weaker sales, it means consumers—and by extension, the economy—are struggling.

Darker Clouds Ahead for Retail Space…But Not for Retail Investors

Muted Retail SectorThis past week, as many of my readers may recall, I discussed the slowing that’s occurring in the global economy as demonstrated by consumer spending at both McDonalds Corporation (NYSE/MCD) and Wal-Mart Stores Inc. (NYSE/WMT). Now, my concerns have just picked up following Wednesday’s retail sales reading. The core reading excluding automotive and food sales grew a mere 0.1% in July, according to the U.S. Department of Commerce, which was below the 0.3% estimate and the weakest reading since way back in January, when Old Man Winter was blamed for everything. But with the winter excuses over, it still appears consumers are hesitant on wanting to spend. Not only is consumer spending on everyday items dryin ... Read More

Shift in Consumer Spending Habits Sure to Reward This Stock

How a Few Clicks Could Reward This Company BigThere was a time in the past when Wal-Mart Stores, Inc. (NYSE/WMT) was the top retail stock for investors and the go-to place to find a bargain. I used to refer to the retailer as the “Death Star” of the retail sector, killing off smaller rivals via its expansion. But as my stock analysis points out, that was yesterday. The shopping environment is much more competitive now; it’s almost akin to a bowl of piranhas, where there are multiple retailers vying to snap up fewer consumer dollars. According to my stock analysis, Wal-Mart doesn’t only have the big-box stores like Costco ... Read More

A Compelling Case for This Retail Discounter

While Others Flee This Discounter, It Tops My ListThere is a lot of hurt out there in the retail sector as consumers have yet to come back in full force. The soft consumer sentiment has impacted retailers across the board, from the specialty retailers to department stores. Even the discount and big-box stores, which are pretty resilient when spending declines, are hurting at the register. Consequently, we saw a consolidation in the discount sector after Dollar Tree, Inc. (NASDAQ/DLTR) decided to snap up rival Family Dollar Stores, Inc. (NYSE/FDO) in a cash and stock deal valued at $8.5 billion, or about $74.00 per share. I last talked about picking up a company like Family Dollar Stores in April as ... Read More

My Top “Made in America” Stock Pick Selling Under a Dollar

investment strategiesThe current stock market risk continues to be high for technology and small-cap stocks. Yet with the selling, we are beginning to see some decent opportunities coming to the surface. The small-cap Russell 2000 is down just over seven percent after previously being down by more than 10% in the stock market. And while we are seeing heated stock market selling in higher-beta technology small-cap stocks, there are also opportunities emerging. Think of it as a current sale in the stock market that could inevitably see bigger discounts to buy equities in the stock market on the horizon. But a small retail stock that I feel could reward ... Read More

Consumer Spending Growth in February Bad Sign for Investors?

Consumer Spending GrowthThe United States Census Bureau reported consumer spending in the U.S. economy—adjusted for price fluctuation—increased by 0.2% in February from the previous month. In January, consumer spending increased by 0.1% after seeing a decline in December. (Source: “Personal Income and Outlays, February 2014,” United States Census Bureau web site, March 28, 2014.) This sent a wave of optimism through the markets. We heard consumer spending is going higher; therefore, the U.S. economy will improve. Buy and buy some more, or you will miss out on future gains was what we were told. However, I don ... Read More