The Suffering is OVER — Retail Rises from the Ashes
Wall Street analysts and the financial media are finally catching on to a story that we’ve quietly tracked for the better part of the past two years…
They’re beginning to figure out that brick and mortar retail isn’t about to buckle under the weight of Amazon’s e-commerce juggernaut. In fact, some old-school retail players are setting up for impressive growth in the months and years ahead.
That means you have a great chance to cash in on some lucrative trades as the herd fights to get back into the retail names they were so eager to sell as Amazon rose to its position as a dominant market leader.
An Evercore analyst sums up the situation perfectly in a bombshell note released this week, stating that “the market is still married to the sensational ‘retailpocalypse’ narrative which assumes that Amazon and other digital disruptors will continue unabated… a viewpoint with which we no longer agree.”
The Evercore note is hitting Wall Street just in time. The SPDR S&P Retail ETF (NYSE:XRT) has steadily trended higher for two months. Yesterday’s gain of more than 2% marked the ETF’s strongest performance since April. It’s now just shy of 3% from its all-time high posted during the January melt up.
During the January melt-up rally, we noted how the retail ETF was back on track and even outperforming the red-hot Nasdaq Composite. At the time, beleaguered retail names were helping lead the charge higher.
But the February correction slammed XRT. The retail ETF quickly coughed up its market-leading gains and sunk into the red. It was teetering near its December lows by the end of the first quarter.
As it turns out, this was rock-bottom for these comeback plays. Sentiment is now beginning to shift in favor of the once-ragged retailers. The group is up more than 7.5% during the second quarter, compared to a gain of 4% in the S&P 500.
It looks like the worst is over for brick and mortar retailers as the major averages approach all-time highs once again. Despite what the media has fed us over the past few years, it’s becoming clear that traditional retail and Amazon can co-exist peacefully.
Of course, some old-school retail stores are dying. It’s undeniable. But the recent Sears Holdings (NASDAQ:SHLD) capitulation might have been the final shake out for these maligned stocks.
As the Sears comeback move falls apart, other old-school department stores that are in a better position are firming up. Macy’s (NYSE:M) is one of these names. Sears loss is Macy’s gain as the stock jumped more than 4% to new 2018 highs to kick off the trading week. It’s now up almost 50% year-to-date. Not bad for a dead mall stock that briefly crashed below $18 per share just six months ago…
Another retail name in our portfolio is also catching a bid. Home Depot (NYSE:HD) shares are shaking off slow spring sales and powering higher this week. The stock jumped more than 2% to new three-month highs on Monday. The move puts the stock’s January highs back in play as summer approaches.
If HD can harness its newfound momentum, double-digit gains are on the way in no time flat…