Stocks I Love (and the Stocks I Hate)

The S&P 500 hit a new high for the year last month. Great news for many folks’ portfolios.

But even when markets are strong across the board there’s always an exception or two.

And there’s nothing worse than watching someone else make big money scores while you’re hemorrhaging cash.

When it comes to investing, what you DON’T own is just as important as what you DO own.

Even in a sharply rising stock market, there are plenty of sectors you should avoid like the plague.

What sector is NOT representative of the market’s strong performance this year?

The Answer Is Retail Stocks

The Commerce Department reported in February that retail sales rose a better-than-expected 0.2% in January from December.

This, excluding automobiles and gasoline, saw sales rise 1.2%.

OK on the surface, right?

As always, the devil’s in the details. What didn’t get reported was much more telling:

  • 5 consecutive months of falling appliance sales
  • Clothing sales at a 10-month low
  • Gasoline sales at a 15-month low
  • 18-month low for electronics sales
  • 20-month low for furniture sales.

chart

The biggest fly in the ointment was a big downward revision to already dismal December retail sales results. That number was slashed to -1.6% from -1.2% previously reported.

It’s the steepest drop in retail sales since 2009, on the heels of the Great Recession.

What makes this more alarming is December is the most important month of the year for retailers because of holiday spending.

The Retail Apocalypse Is Far From Finished

It’s no surprise there’s been a steady stream of retailers either closing stores or shutting their doors entirely this year. The list includes Gap, Victoria’s Secret, Charlotte Russe, JCPenney, Payless ShoeSource, Gymboree, Chico’s, Family Dollar and Abercrombie & Fitch.

According to Coresight Research, 4,810 retail stores have closed so far this year and that was only as of mid-March.

Plus, this comes on the heels of 2018 closings of Destination Maternity, Macy’s, The Bon-Ton, Toys R Us and many more.

retail chart

Simon Property Group is the largest owner of shopping malls in the U.S. CEO David Simon warned that even more closures are yet to come.

“There are some retailers out there that we’re nervous about,” he said. “We’re concerned about a few [bankruptcies] that should shake out in the first quarter.”

It is easy to give lip service to risk management when the stock market is moving higher, but I spend most of my waking moments thinking about risk and, most importantly, how to avoid it. I think you should, too.

Retail Stocks Are in Trouble

I wouldn’t touch retail stocks with a 10-foot pole today. I very strongly suggest you do the same.

Instead, you should focus your investments squarely on the sectors of the market that are outperforming.

Case in point, technology is one of the best-performing sectors this year, up nearly 20%.

You could hitch your wagon to one of many high-flying blue chip tech companies today and get paid tomorrow. Many of these companies offer great dividends, too.

Take for instance Cisco Systems (NASDAQ: CSCO). On the year, CSCO shares are up over 22%, plus they offer shareholders a 2.54% yield, with an annualized payout of $1.40.

Or another red-hot sector is hotel property groups. One of the hotel stocks we suggested last year, Ryman Hospitality Properties Inc. (NYSE: RHP), is up over 25% on the year. Even better, RHP offers a 4.31% dividend yield with an annualized payout of $3.60!

Bottom line: What you don’t own is just as important as what you do.

Here’s to growing your wealth,

Mike Burnick

Mike Burnick
Chief Income Expert, Mike Burnick’s Wealth Watch

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It has now been 3 weeks since famed investor Stan Druckenmiller told the Economic Club of New York that ‘the risk-reward for equity is maybe as bad as I’ve seen it in my career’ – And since then the S&P has rallied nearly 11%! So, do us all a favor and “Say it again, Stan!”

Mike Burnick

Mike Burnick is the editor of Mike Burnick’s Wealth Watch, Infinite Income, Amplified Income and Millionaire Moments. Mike has been bringing his trading strategies to the masses for over 30 years. He has been with Seven Figure Publishing since 2017. In 2018, the average return of Infinite Income beat the...

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