What Best Buy and Macy's are saying about retail
The back-to-school season could be strong, and this year's holiday season could follow suit.
Best Buy (BBY) and Macy's (M) say it all. Both missed. Both guided down. Both were pretty shocking. Macy's because it has been amazingly consistent and Best Buy because, honestly, the commentary could not have been more negative.
Macy's got hammered, and it turned out to be a fabulous buying opportunity. Why? Try as I have, I don't know. Maybe it is just a belief that things are getting better. Maybe because people believe that the lower gasoline goes, the better Macy's does. Perhaps it was an aberration? Maybe they saw how J.C. Penney (JCP) came back but not so much that it made a difference? Maybe it was a recognition that there has been less price cutting in the group? We don't even know. No one has the answer, but I have heard a lot of conjecture.
The simple fact is that there is a huge bid under retail and Macy's is retail.
Best Buy was far worse than Macy's. The commentary was simply awful. When I read it, I said, "They are telling you to sell this stock because they are going to get their heads beaten in by Amazon (AMZN)."
But, as with Macy's, it didn't matter. Now the stock is going higher. You can say, "Well, wait, as with Macy's, we didn't get any real downgrades." Still, though, it's working, and that's what matters.
So what's up with all of this? If you look at the good performers in the group -- TJX (TJX), Ross Stores (ROST) and Urban Outfitters(URBN) -- and you notice that Target (TGT) didn't go down on that horrendous quarter, you have to conclude two things:
- The back-to-school season is going much better than you think.
- People are betting the holiday season is going to be very strong.
In Best Buy's case, it is betting that the holiday season is going to be better because of gaming, new cellphones and new GoPro (GPRO) devices, all of which are in the Best Buy sweet spot.
Like the other day, when I opined that you didn't have to worry about the bank stocks' rally because they don't report for a long time, you can speculate that holiday season can take these retailers far -- provided that you don't get any real bad back-to-school commentary. I think you have to believe that you would have already if that were the case.
Hence why the move has legs. Hence why you have to buy stocks of companies that didn't report good numbers, betting that the future is brighter. I get it. I wish it weren't like that, but I get it, and I think that's the real reason the SPDR S&P Retail ETF (XRT) seems to have a bid underneath it, no matter what's said or done.
- The suspicious buying in Kellogg (K) is so persistent, who doesn't want to go long it?
- The selling in SunTrust (STI) is ridiculous, but it keeps happening.
- I think the fact that SeaDrill (SDRL) isn't down badly on that terrible number means two things: One, some analysts will still downgrade it tomorrow but, two, because they are not buying more ships, we are putting in a bottom.
- I hear Doug Kass on social media stocks. They will be doggie as long as there is a threat of monster IPOs ahead.
- But I also know the earnings-per-share power of Facebook (FB), Google (GOOGL) and even Twitter (TWTR) beckons, and I wouldn't sell Yelp (YELP) no matter what.
- GoPro and Mobileye (MBLY) are the two new specs that are loved and will stay that way for a long time.
Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio for the stocks Cramer thinks could be winners. The portfolio
is long FB and GOOGL.
The policy of letting illegal Mexicans migrate into the US work force to shore up the falling US work force as baby boomers retired has totally back fired as it is easier for the illegal Mexicans to get welfare money and free health care than US citizens. Add to the expense burden of our government instead of adding to it's tax coffers as the policy makers had hoped.
The Ebola virus has reach critical mass and is no longer stoppable going to double in victims in 21 days and double again after that -- well you see the end result at least 1/3 of the world population gone by end of next year.
ISIS is going to take over the Arab world and it's oil soon. We have at least 3 aircraft carriers with about 90 planes each and hundreds of planes at military bases around the middle east and yet we only hit ISIS 89 times the first week of air strikes -- We do not want to hit them and the targets we said we hit were probably non targets or already destroyed targets. We want ISIS to defeat all the Shiite Muslims over there they are our only way of defeating them as we can not send troops in to do it.
Expect to hear more of Iraq falling to these guys. Why do you think we staged most of the US military hardware in Northern Iraq real handy for them to grab??? And why do you think we spent years training the Sunni's to use the weapons???
And as far as the now $17 trillion government debt ??? With interest rates going to 5 percent next year to attract buyers for worthless US T-bills the economy is doomed to collapse.
Add in that Europe and Japan have both totally collapsed economies and the BRICS countries growing at close to 10 percent a year and there we have what is happening.
There is one more disaster out there we have the Ebola, ISIS, Western debt crisis all coming to an head and yet there is one more that has not raised it's head yet.
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