Wal-Mart Stocks
Muted Retail Growth to Move Higher? How to Play the Sector Minus Risk
By George Leong for Daily Gains Letter | Feb 27, 2015
Retailers continue to fight for the limited dollar of the consumer. The retail sector is extremely competitive and success is contingent on the right strategy of attack, which means offering the right product mix, competitive pricing, and in the ultra-competitive apparel sector, it means keeping on top of the trends and consumer sentiment.
A good product today could be passé a year from now, as consumer sentiment changes rapidly.
Why Target Failed in Its Canadian Expansion
Target Corporation (NYSE/TGT) beat Wall Street estimates on Wednesday, despite recording a massive $5.1-billion charge after deciding to exit Canada in what has to be one of the biggest blunders in retail history. The reality is that it wasn’t the Canadian consumer sentiment that choked Target, but the company’s mistake in its expansion plans, the first outside of the United States.
Other major retailers, such as Wal-Mart Stores Inc. (NYSE/WMT), The Home Depot Inc. (NYSE/HD), Lowes Companies, Inc. (NYSE/LOW), The Gap, Inc. (NYSE/GPS), and Best Buy Co., Inc. (NYSE/BBY) to name a few, have managed to expand successfully in Canada after understanding the consumer sentiment there.
Target simply did a bad job in not only its expansion after buying up locations via its purchase of troubled Zellers, but also its exit. The company operated poorly in Canada and failed to grasp the consumer sentiment there. My view is that Target should’ve kept some of its own developed stores in good locations and made the experience better for the Canadian shopper. It didn’t, so here we are. Projected sales growth of 1.6% for FY16 doesn’t offer much comfort.
Retailers Stalling, but Could Edge Higher
The … Read More
EZCORP and Green Dot to Profit from America’s Coming Reckoning?
By George Leong for Daily Gains Letter | Feb 25, 2015
There’s a financial reckoning coming, folks. The easy money pushed through the financial system and economy by the Federal Reserve over the past several years may have given us this six-year bull stock market, but it has also allowed personal debt loads to amass. Heck, even the government has accumulated in excess of $18.0 trillion in debt. But there’s an investment opportunity that could emerge from this.
Investment Opportunity Coming as Interest Rates Rise?
For now, with interest rates near zero, everything is fine. But rates will likely begin to move higher by as early as halfway through this year. With higher rates come a heavier debt burden and financing costs, which will eat the disposable income consumers would otherwise use for spending.
Bankrate.com released a survey that pointed to the growing build-up of debt by Americans. In a survey of 1,000 adults, it was found that 37% have credit card debt that is equal to or greater than their emergency savings. This doesn’t even include other debts, such as mortgages or loans.
What this means is that we could see a financial collapse as interest rates rise. There are already 48 million Americans using food stamps, and this may increase. But while the situation could surely worsen, there will be an investment opportunity. To play this scenario, look for companies that can benefit from a declining middle class and those struggling with their finances.
How to Profit from Rising Interest Rates and Debt: Two Stocks to Watch
A good example of the type of stock to watch during this potential investment opportunity is EZCORP, Inc. (NASDAQ/EZPW), which has a … Read More
Top Stocks to Watch for Steady Dividends and Capital Gains
By George Leong for Daily Gains Letter | Feb 9, 2015
The stock market may be blooming again with the major key stock indices rallying back above their 50-day moving average (MA), but there is still ample downside vulnerability.
We have the mess in the eurozone with Greece threatening to leave the euro and not honor its massive debt obligations. There’s also the China risk. Then there are the oil prices. Oil rallied to $53.00 last week, prior to retrenching and then rallying again. It’s going to be nerve-racking.
The problem investors continue to face is the lack of alternatives to the stock market. The 10-year bond yields 1.82%, which is not great unless you have tons of cash. Of course, you could buy distressed high-yielding Greek or Russian debt, but why would you, given the default risk?
So that leaves us with stocks.
Stocks to Watch While Bonds and Global Economy Stagnate
For those of you looking for and requiring dividends, it’s not easy at this time. There are the big banks and higher-risk regional banks to consider. For this reason, I would be sticking with the more stable dividend-paying stocks that not only pay dividends, but also offer the opportunity for capital gains.
The most obvious target for dividends is the blue-chip area. These are great companies with proven long-term sustainability for investors seeking dividends and growth. We are talking about world-class multinational companies, such as The Boeing Company (NYSE/BA), General Electric Company (NYSE/GE), Johnson & Johnson (NYSE/JNJ), The Coca-Cola Company (NYSE/KO), McDonalds Corporation (NYSE/MCD), The Procter & Gamble Company (NYSE/PG), and Wal-Mart Stores Inc. (NYSE/WMT). For the most part, you cannot go wrong with blue-chip dividend stocks…. Read More
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