Bigger Than Amazon? Hidden Gains Emerge in Old-School Retail

Traders are yanking around the major averages to kick off the week.

Monday’s session featured a quick comeback move in the major averages as they recovered from their overnight losses. But stocks couldn’t hang onto their morning gains. By the closing bell, the Dow had led the averages lower with a drop of more than 100 points, while the Nasdaq Composite finished just barely in the red.

Sure, the market has tested our patience over the past few weeks. Yet despite a tough trading environment, our market leaders continue to find new highs.

Look no further than Amazon.com (NASDAQ:AMZN). Shares of the e-commerce giant are higher by nearly 65% so far this year, easily trouncing the Nasdaq Composite’s 13% gain.

Amazon’s dominance of its brick and mortar cousins isn’t exactly a well-kept secret these days. In fact, Amazon’s meteoric rise inspired countless “death of retail” segments on financial TV as retail stocks crashed in 2017. Empty stores, cratering stocks, and dead malls painted a post-apocalyptic retail scene with no end in sight.

But a funny thing happened this year…

Instead of falling to new lows, retail stocks blasted out of their collective funk following the winter correction. By this summer, the group was quietly posting new highs as some of its biggest laggards exploded higher.

Of course, we’ve ridden the brick and mortar retail wave all year. We showed you how the SPDR S&P Retail ETF (NYSE:XRT) has posted gains of 14% year-to-date after breaking out to new all-time highs — and tipped you off to some of the biggest names behind the comeback move.

For instance, you might have noticed some major retailers that are streaking higher as they attempt to keep up with Amazon. Target Corp. (NYSE:TGT) — one of 2017’s left-for-dead retail names — has gained more than 25% so far this year. The stock broke out to new 52-week highs last month and continues to build on its gains.

Then there’s Macy’s Inc. (NYSE:M) — ne of the “dead mall” department store stocks trampled by fleeing investors last year. Not anymore. It’s up an impressive 62% year-to-date, rivaling the gains of the Amazon juggernaut.

too close to call

Earlier this summer, we showed you how the retail narrative has officially shifted to the online consumer. Instead of Black Friday, we now have Cyber Monday (which is quickly melting into a weeks-long online shopping spree). It’s also no coincidence that Prime Day has become the nation’s go-to “Christmas in July” online shopping holiday.

But the old-school retailers are also learning new tricks to attract customers to their stores. Customers are beginning to flock to physical store locations in search of unique shopping experiences. A new report from Telsey Advisory Group featured in Bloomberg notes how American Eagle Outfitters (NYSE:AEO) is offering free washers and dryers to customers with a student ID, while other mall boutiques are following suit with complimentary smartphone charging and other unique perks.

Strong earnings from Macy’s and Walmart this week could set the tone for bang-up quarter for the sector. If this positive earnings trend continues, we could see more of these new retail winners challenge Amazon’s gains during the third and fourth quarters.


Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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