Barron's Take On Retailers
3555 views
Rate Now: 1 2 3 4

average rating: 0.00 / 0 ratings
Created by barrons3
DESCRIPTION:

Date updated:12-20-2008

Some retailers won't survive the downturn in consumer spending -- at least not without a trip to bankruptcy court. How to spot problems on the balance sheet and at the mall.

symbol name last price % change open
  • +
  • COST
    Costco Wholesale
  • $60.06
  • -0.69%
  • $60.30

Over time, the names at the top of our list should reward investors, even though some rock-solid retailers, such as Costco Wholesale , look pricey at current levels. The warehouse-club giant would have almost $1 billion of cash, or $2.10 a share, if it paid down all its debt. Yet its stock trades for 17 times expected earnings for the fiscal year ending August 2010, one of the highest multiples in the retailing group.

People owning COST also tend to own: ABMINFOJASLMTNOCQRTN

TheStreet.com Rating: B What is this?

  • +
  • NKE
    Nike Inc Cl B
  • $63.92
  • +0.57%
  • $63.34

Among cash-rich retailers, Nike and Coach look especially attractive. They sport moderate price/earnings multiples, have little debt and are expected to report higher earnings in fiscal 2009. Bob Drbul, a retail analyst at Barclays Capital, has an Overweight rating on both, and notes that "retailers become more dependent on established brands" in uncertain times. Nike trades for 51.15, or 12 times expected earnings for the fiscal year ending May 2010, and had $2.7 billion of cash and short-term investments, and $478 million of debt as of the end of November. The company reported last week that net income jumped 8.8% in the November quarter, on the strength of its international business.

People owning NKE also tend to own: AMTCMCSKLHRYAAYUNHXTEXXTXI

TheStreet.com Rating: A- What is this?

  • +
  • COH
    Coach Inc
  • $33.79
  • -0.38%
  • $33.72

Coach, a onetime highflier, today trades for about 21, or just nine times estimates for the fiscal year ending in June 2010. It had $406 million, or $1.22 a share in net cash -- or cash and equivalents minus total debt -- as of the end of September. Coach is well positioned in the handbag and accessories market, where its brand has long appealed to so-called aspirational shoppers; if the recession deepens, it could draw interest, as well, from the former buyers of four-digit "it" bags.

People owning COH also tend to own: AMTANFAVIDCNOCOSTESIEXPD

TheStreet.com Rating: B- What is this?

  • +
  • ANF
    Abercrombie & Fit
  • $39.73
  • -0.95%
  • $39.90

Teen apparel chains have taken a beating this year from skeptical investors; Abercrombie & Fitch is down more than 70%, to 22.84, while American Eagle Outfitters has fallen 53%, to 9.81. Yet both companies have net cash -- Abercrombie's $198 million and American Eagle's $269 million. David Berman, manager of Durban Capital, a New York hedge fund, prefers American Eagle because its fashions are less pricey -- a plus, these days, for teens and parents. Abercrombie's same-store sales fell 28% in November, compared with a far more modest decline of 11% at American Eagle. Berman warns that both are likely to miss earnings estimates this year.

People owning ANF also tend to own: AMGNBBBBCWCOELOSHARIIFMER

TheStreet.com Rating: C What is this?

  • +
  • AEO
    Amer Eagle Outfit
  • $14.62
  • -1.48%
  • $14.71

Teen apparel chains have taken a beating this year from skeptical investors; Abercrombie & Fitch is down more than 70%, to 22.84, while American Eagle Outfitters has fallen 53%, to 9.81. Yet both companies have net cash -- Abercrombie's $198 million and American Eagle's $269 million. David Berman, manager of Durban Capital, a New York hedge fund, prefers American Eagle because its fashions are less pricey -- a plus, these days, for teens and parents. Abercrombie's same-store sales fell 28% in November, compared with a far more modest decline of 11% at American Eagle. Berman warns that both are likely to miss earnings estimates this year.

People owning AEO also tend to own: LRWLYGRWTSHLDSHWTHOBAC

TheStreet.com Rating: C+ What is this?

  • +
  • AMZN
    Amazon.com
  • $129.66
  • +0.52%
  • $127.51

Online retailer Amazon.com has the biggest cash stash on our list: $2.3 billion, or $5.33 a share. The stock is down 44% year to date, to a recent 51.56, but still sports a hefty price/earnings multiple of 35 times next year's estimated earnings.

People owning AMZN also tend to own: AAPLAMTATHRBEASCTSHEMCGOOG

TheStreet.com Rating: B What is this?

  • +
  • WMT
    Wal Mart Stores
  • $54.28
  • -0.48%
  • $54.53

In the boom years, leverage wasn't a problem for many retailers, who borrowed liberally to make acquisitions, build new stores or buy back stock at prices that now seem ludicrously high. Today, however, bond markets are closed to all but the best credits. Wal-Mart Stores, and possibly Target , are the only retailers that still could sell debt at reasonable yields, wagers Carol Levenson, director of research at Gimme Credit. But some analysts are wary of Target, citing the company's exposure to potential credit-card losses.

People owning WMT also tend to own: ABTDGXEPDFMDGSKJNJJOSB

TheStreet.com Rating: B What is this?

  • +
  • TGT
    Target Cp
  • $47.46
  • -0.92%
  • $47.73

In the boom years, leverage wasn't a problem for many retailers, who borrowed liberally to make acquisitions, build new stores or buy back stock at prices that now seem ludicrously high. Today, however, bond markets are closed to all but the best credits. Wal-Mart Stores, and possibly Target , are the only retailers that still could sell debt at reasonable yields, wagers Carol Levenson, director of research at Gimme Credit. But some analysts are wary of Target, citing the company's exposure to potential credit-card losses.

People owning TGT also tend to own: CCATDEFNMFREGEKO

TheStreet.com Rating: B- What is this?

previous next

Portfolio not tracked!

Comments not available

ADD YOUR COMMENTS:

Cramer's Take on Headline Stocks...

Not a Stockpickr member? Join the community today -- for free.Regardless of why a stock is in the news, it never hurts to hear what a professional investor has to say about...

11.20.09 | 11:48 AM
Jim Cramer's Portfolios of the Week

By Roberto Pedone Posted on Nov. 20, 2009 According to Jim Cramer, options expiration is driving the current market selloff. He pointed out that the only stocks that we...

11.20.09 | 08:09 AM
'Fast Money' Portfolios of the Week

By Roberto Pedone Posted on Nov. 19, 2009 According to CNBC’s “Fast Money” traders, the stock market is showing no signs of stopping its current bull run. Joe Ter...

11.19.09 | 11:13 AM
Squeezing the Shorts: Earnings G...

By Jonas Elmerraji Posted on Nov. 18, 2009 There are plenty of reasons for stocks to have the attention of short-sellers. Waning financials, a deteriorating business mo...

11.18.09 | 12:36 PM
more articles
General market Technical Analysi...
11.14.07 | 22:55 PM From author ZA
What happened to SPRD this week?
11.21.09 | 19:28 PM From author xdhong
The Presidential/Political Thread
01.02.08 | 08:05 AM From author Dave Cox
more forums
Q. If Goldman Sachs is stupid, what...
11.21.09 | 17:17 PM Asked by Clementplace

A. Here's another one:
http://seekingalpha.com/article/173986-s
hipping-three-high-risk-high-reward-opti
ons

Also, DSX, for instance moved up after
hours.

It might depend on your timeframe. The
related indexes appear to be trending
up. (this is not a recommendation).

today 's lists
Dogs of the Dow

Here are the 10 stocks in the Dow Jones Industrial Average stocks with the highest yields as of the market close on June 2, 2009. more

52-Week Lows

Here is a list of some of the biggest stocks that hit 52-week lows on Nov. 20, 2009. more

Rising on Unusual Volume

Here are some stocks that moved up on unusual volume on Nov. 19, 2009. more