Wednesday, May 29, 2013

Top Retail Stocks To Buy Right Now

On Wednesday, Groupon (NASDAQ: GRPN  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.�

Groupon became famous for its popular daily deals, which allowed shoppers to take advantage of huge savings from Groupon's retailer-customers. But lately, that niche has lost its popularity, forcing the company to retrench. Let's take an early look at what's been happening with Groupon over the past quarter and what we're likely to see in its report.

Stats on Groupon

Analyst EPS Estimate

Top Retail Stocks To Buy Right Now: Costco Wholesale Corporation(COST)

Costco Wholesale Corporation operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. The company's product categories include candy, snack foods, tobacco, alcoholic and non-alcoholic beverages, and cleaning and institutional supplies; appliances, electronics, health and beauty aids, hardware, office supplies, garden and patio, sporting goods, toys, seasonal items, and automotive supplies; dry and institutionally packaged foods; apparel, domestics, jewelry, house wares, media, home furnishings, cameras, and small appliances; meat, bakery, deli, and produce; and gas stations, pharmacy, food court, optical, one-hour photo, hearing aid, and travel. It also provides business and gold star (individual) membership services. As of April 26, 2011, the company operated 581 warehouses, including 425 in the United States and Puerto Rico, 80 in Canada, 22 in the Uni ted Kingdom, 7 in Korea, 6 in Taiwan, 8 in Japan, 1 in Australia, and 32 in Mexico. It also has Costco Online, an electronic commerce Web site, at costco.com in the United States and at costco.ca in Canada. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

Advisors' Opinion:
  • [By Jonas Elmerraji]

    Investors should love Costco Wholesale (COST) in 2013 -- and not just when they're trying to buy ketchup by the gallon. Costco isn't the biggest club warehouse in terms of locations, but it is the best. Costco's 430 locations boast much higher revenues per square foot than competitors like BJ's or Sam's Club (around twice as much, in fact) thanks to a niche of selling bargain-priced big-ticket items. That niche also keeps Costco's customer mix skewed towards "mass affluent" consumers.

    Costco operates a membership model, which means that only the firm's 64 million members can shop in its stores. That membership restriction provides Costco with a recurring revenue stream, and (more significantly), a very loyal and sticky customer base. Because consumers are less likely to carry memberships from competing wholesale clubs, Costco's existing base of higher-spending customers gives the firm a shallow economic moat vs. its peers.

    Because COST earns the majority of its profits from those membership fees, it's able to charge very low prices for its merchandise. Financially, Costco is in stellar shape. The firm carries close to a billion dollars in net cash, a hefty amount of dry powder for a retailer. As consumers keep spending in 2013, Costco should keep rallying.

Top Retail Stocks To Buy Right Now: Radioshack Corporation(RSH)

RadioShack Corporation engages in the retail sale of consumer electronic goods and services through its RadioShack store chain and kiosk operations. Its products include postpaid and prepaid wireless handsets and communication devices, such as scanners and global positioning system (GPS) products; home entertainment, wireless, music, computer, video game, and GPS accessories; media storage, power adapters, digital imaging products, and headphones; home audio and video end-products, personal computing products, residential telephones, and voice over Internet protocol products; digital cameras, digital music players, toys, satellite radios, video gaming hardware, camcorders, and general radios; general and special purpose batteries and battery chargers; and wires and cables, connectivity products, components and tools, and hobby products. The company also provides consumers access to third-party services, such as prepaid wireless airtime and extended service plans in its ser vice platform. In addition, it manufactures various products, including telephones, antennas, wires, and cable products, as well as various hard-to-find parts and accessories for consumer electronics products; and provides repair services. As of March 31, 2011, the company operated 4,467 company-operated retail stores under the RadioShack brand name in the United States; and 1,304 kiosks located in Target and Sam?s Club stores. As of December 31, 2010, it operated 211 company-operated stores under the RadioShack brand, 9 dealers, and 1 distribution center in Mexico; a network of 1,207 RadioShack dealer outlets, including 34 located outside of North America; and 4 distribution centers in the United States. Further, the company sells its products through its Website, radioshack.com. RadioShack Corporation was founded in 1899 and is based in Fort Worth, Texas.

Advisors' Opinion:
  • [By David Sterman]

    Perhaps the closest catalyst is for this consumer-electronics retailer, which will commence a new sales agreement with Verizon (NYSE: VZ) on Thursday, Sept. 15. Verizon controls roughly 40% of the wireless market, so the new relationship is bound to bring a lot more foot traffic than past relationships with other carriers such as Sprint (NYSE: S) and T-Mobile.

    And for this type of business, foot traffic is the name of the game. RadioShack needs people to visit stores and browse for hot products. These customers may not make their intended purchase that day, but they often leave with other items such as batteries, Bluetooth headsets, GPS devices, etc. If investors take note of any uptick in RadioShack's traffic, then they may stick around long enough to notice this stock's financials are hugely appealing. Sure, growth has been anemic, but RadioShack has still managed to generate very strong free cash flow in the $165 million range during the past five years. As a result, the company's share count has fallen from 180 million in 2003 to about 120 million today. Ongoing buybacks will take this number even lower, so per-share profits are bound to rise even if overall net income stays flat.

    I'm guessing the Verizon deal will be a real plus for the stock, helping net income to grow at a moderate pace and earnings per share (EPS) to grow even more robustly (thanks to that shrinking share count). Analysts expect EPS to rise about 15% in 2012 to roughly $1.80, yielding a price-to-earnings (P/E) multiple below seven. On an enterprise-value basis, this stock is absurdly cheap, trading for less than four times earnings before interest, taxes, depreciation and amortization (EBITDA).

  • [By Roberto Pedone]

    One final under-$10 stock that looks ready to trigger a major breakout trade is RadioShack (RSH), which is involved in the retail sale of consumer electronics goods and services through its RadioShack store chain. This stock has been red hot so far in 2013, with shares up a whopping 72%.

    If you take a look at the chart for RadioShack, you'll notice that this stock recently formed a double bottom chart pattern at around $3.03 to $2.97 a share. Following that bottom, shares of RSH have ripped higher back above its 50-day moving average at $3.28 a share and it broke out above some near-term overhead resistance levels at $3.33 to $3.34 a share. That move is now quickly pushing shares of RSH within range of triggering an even bigger breakout trade.

    Traders should now look for long-biased trades in RSH if it manages to break out above some key overhead resistance levels at $3.87 to $4.17 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 2.38 million shares. If that breakout triggers soon, then RSH will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $6 a share.

    Traders can look to buy RSH off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day at $3.28 a share, or right below $3 a share. One can also buy off strength once RSH clears those breakout levels with volume and then simply use a stop right below $3.40 to $3.30 a share.

    This stock is a favorite target of the bears, since the current short interest as a percentage of the float for RSH is extremely high at 36.1%. If RSH triggers that breakout soon, then this stock has explosive upside potential due to this high short interest. We could easily get a monster short-squeeze, so be ready to play the breakout if it triggers for shares of RSH.

Hot Chemical Stocks To Invest In 2014: Sonic Automotive Inc.(SAH)

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It engages in the sale of new and used cars, light trucks, and replacement parts; provision of vehicle maintenance, warranty repair, paint, and collision repair services; and arrangement of extended service contracts, financing, insurance, and other aftermarket products. As of December 31, 2011, the company operated 119 dealerships representing 30 brands of cars and light trucks, and 23 collision repair centers in 15 states. The company was founded in 1997 and is based in Charlotte, North Carolina.

Top Retail Stocks To Buy Right Now: Family Dollar Stores Inc.(FDO)

Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. The company offers consumables, including household chemicals, paper products, candy and snack products, health and beauty aids, hardware and automotive supplies, and pet food products and supplies; and home products, which comprise domestics, housewares, giftware products, and home decor products. It also provides apparel products and accessories consisting of men?s and women?s clothing products, boys? and girls? clothing products, infants? clothing products, shoes, and fashion accessories; and seasonal products and electronics, such as toys, stationery and school supplies, seasonal goods, and personal electronics. As of August 11, 2011, the company operated approximately 7,000 stores in rural and urban settings across 44 states. Family Dollar Stores, Inc. was founded in 1959 and is headquartered in Matthews, North Carolina .

Advisors' Opinion:
  • [By Sy_Harding]

    My second retail value stock is clearly a value stock: Family Dollar Stores (FDO -0.20%, news). Operating in the intensely competitive discount retail segment at a time when its customer base was feeling the brunt of the slow recovery, Family Dollar managed to grow same-store sales 4.8% in fiscal 2011, with a 5% to 7% increase projected for fiscal 2012 and to improve its market position by shifting its merchandise mix and moving into urban neighborhoods. The stock trades at about 18 times trailing 12-month earnings per share and just about 13 times forward projected earnings. Wall Street analysts are looking for 23.6% earnings growth in the quarter that ends in February 2012.

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