Pillars of strength in retail
Home Depot, Dick's and Best Buy should all be bought on any weakness.
The homework doesn't dovetail with the shares. That's how I felt about the way stocks traded in the wake of the Best Buy (BBY), Home Depot (HD) and Dick's (DKS) earnings calls, because all three were basically in all-systems-go mode for suppliers.
Home Depot loves to give you the state of the state, and the company continues to show you why it can have such positive comparable-store numbers -- namely because business is booming from continued house-price inflation. That's how you get your American stores to grow at 8.2 percent, which has come due to a combination of rising traffic as well as increased spending.
Why not? When you are buying a home these days, you are doing so because you need it -- but also because you now believe that, over time, it will start to appreciate in value again. We see these big 10 percent jumps in housing prices across the country, with some 20 percent areas thrown in, and we might want to believe that we are in some inflationary spiral. But I think, after listening to the Home Depot call, that we are still in catch-up mode from where we left off.
I say that because Home Depot, beyond giving you a depiction of the psyche of the consumer, also tells you something else. The pro business -- which is the business that comes from getting professionals to both build and renovate your house, rather than you doing it yourself -- has continued to grow at a slightly faster pace than the consumer business. That's excellent news for hiring. In fact, it's one of the few bright spots out there, other than in social, mobile and cloud technology, oil and gas and healthcare.
What's selling? Pretty much everything. That's also good news, because at times there had been aisles at Home Depot that simply weren't moving as well as others were. You've got positive comps in kitchens, lighting, décor, lumber, electrical and indoor garden. All were above the company's average sales. Millwork, flooring, plumbing, outdoor garden, building materials, hardware and tools were positive but below the company average.
My takeaways there: I would have to believe that Fortune Brands Home and Security (FBHS) and Masco (MAS) are doing pretty darned well, although I wouldn't be jumping up and down for Stanley Black & Decker (SWK) off of that. I wonder if Lumber Liquidators (LL) is actually taking share in flooring, given how well their numbers are doing. It's certainly worth pondering.
Home Depot's new enhanced-appliance showroom, when coupled with the online presence, yielded double-digit comps growth for appliances. Any check of the website or the store would tell you that Whirlpool (WHR), which was downgraded Tuesday by a prominent brokerage house, is a big winner.
In perhaps best and most pointed metric, the new Cree (CREE) TrueWhite bulb was called out as a great seller. That's because, as executive vice president of merchandising Craig Manear points out, the bulb "gives off some of the best natural color when compared to other LED bulbs." Two takeaways there: First, terrific -- maybe my house won't look so two-toned outside. Second, you have to, once again, take a look at Cree shares. Even though the stock is up 59% for the year, it's still way off its highs.
For Dick's, the callout is real simple: Apparel and footwear are selling well. Both Nike (NKE) and Under Armour (UA) are mentioned positively. Still, there was an odd interchange in the conference call about how Nike is opening stores that are competitive to Dick's. That was met with a riposte that Dick's is doing some private-label apparel that's selling well, too. I reiterate that Under Armour is the buy here.
Finally, as for Best Buy, it looks as if the tablet is the standout. I know that Apple's (AAPL) become a hated equity, but I keep hearing good things, so I can't join the nitpicker mob. You did get a nice Chrome call out for Google (GOOG), but that's just icing on the Google lovers' cake.
All three chain stores -- Home Depot, Dick's and Best Buy -- are pictures of strength, not weakness. All three stocks should be bought, not sold, on share weakness, despite whatever the "action" says about how well the companies performed. They have performed superbly against both their fields and against retail in general.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL.
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from the days when i did art shows selling pottery, i learned to look at the crowds and see how many people were carrying shopping bags. ALONG with crowds in general.
i don't see the crowds at home depot or best buy. and i don't see people carrying products around within the store.
so i don't know where the numbers Cramer mentions are coming from
"The pro business -- which is the business that comes from getting professionals to both build and renovate your house, rather than you doing it yourself -- has continued to grow at a slightly faster pace than the consumer business. That's excellent news for hiring"
No - Thats every guy with a pickup truck going into home repair business because they can't find a job making decent money. Home repair, landscaping, firewood.......... etc. etc.
ABS, LOM......Fatty Cakes..(like Brent) and a few others has had several, maybe 5-6 Alias...
He sprung a new one the other night, Walkinshaw or something...But tagged it with FatCat..
He nothing but fat, little gookie, living in a box out on the 101...
Ms. Bambi lives under the same bridge on the other side or end.....
And Mister Brucey, jumps boxcars with him and shares the same Library card...
Sometimes he goes over late at night, but we don't know why...
From our spacious Mansion, we can see Fatty's Box down the highway, with binoculars.
Home Depot, Lowes, Menards and others are only based on what is perceived or their numbers...
They had a pretty good come back, when housing started to recover some; And many "baby boomers" along with other retirees felt comfortable enough to spend some money remodeling and refurbishing their abodes.
Along with that more and more Contractors have turned to these stores, for product as opposed to local Lumber Companies ie; Pricing, Discounts, Credit and selections...
Therefore, like competition against a Wal-Mart, the old lumber places can't compete; They are going away..
These business are cyclical in nature, and NOT recession proof, but fairly well run Companies.
And like many stocks are quite pricey lately...
We owned Home Depot and Lowes both until about 8-12 months ago.....Now out of positions.
Menards is privately owned.
Before considering any positions...I would do a lot of research and maybe wait for a 5-10% dip.
Something we all need to remember -- the store called the Federal Government exists at the leisure of the states. --- FACT ----
A boycott is needed soon.
Fatty Cakes....Mr. Fat Cat, Fat Cat, Senor Akimoto, Jose Bueno, Emwolb, and a couple others not used often...Eric Walkinshaw, maybe it was Rickshaw the other day..
Har, har, har.
Crazy 8s....Is not Fat Cat....yuk, yuk, yuk..
The Markets and Equities were crap today, no explanation needed....arf, arf, arf..
And DLH is right about Bobo...
And ABS's signature is Cretin, amongst other sometimes racial titles.
But my racism is good....All other's baaadd.
old joke from years ago. two retailers discussing their mark ups. 5% was actually 5 TIMES their purchase cost. so 70% would actually be 7 times their purchase cost.
when i worked at a lighting company, several products that we sold to home depot at $6, $7, $8 each were retailed at $60, $70, and $80 each, so just "10%"
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These hot movers could rise by double digits in coming months.
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