By Jonas Elmerraji
Posted on Nov. 30, 2009
With Black Friday behind us and another data-heavy week ahead, it’s time to turn once again to Rocket Stocks, our list of beaten-down stocks with near-term growth catalysts and long-term growth potential.
Last week was a particularly significant week for retailers. Retail’s biggest day, Black Friday, came and went, and the results should be making their way to investors this week. And now, with a potential debt debacle developing in Dubai, investors are turning squeamish. For that reason, we’re staying away from any issues that might be affected this week.
In the last 19 weeks, our Rocket Stocks plays have outperformed the S&P 500 index by 36.67%, giving us plenty of reason to stay protective of our gains. Here’s a look at how last week’s plays fared.
We focused almost exclusively on companies with retail exposure last week. Topping the list of plays was Tiffany (TIF), the high-end jewelry retailer that announced earnings on Nov. 25. The stock delivered 4.62% in the last five trading sessions vs. an S&P that only brought in 0.01% for the week.
Also strong was Campbell Soup (CPB), shares of which rallied 3.04% last week following the company’s Nov. 23 conference call. For-profit education play DeVry (DV) followed suit last week, brining in 0.76%.
Trailing the end of our list were Wal-Mart (WMT) and Travelzoo (TZOO), which brought in returns of 0.64% and -1.46% respectively.
Now on to this week’s Rocket Stock plays.
After preliminary results that point to a stronger Black Friday this year and with a Cyber Monday that could follow suit, we’re sticking with a retail focus this week. First up on the list is Amazon.com (AMZN), the ubiquitous online retailer that went head-to-head against Wal-Mart last week to try to win the hearts and minds of spend-conscious consumers.
And it looks like Amazon may have done a good job this year, gaining ground against the stalwart Arkansas-based retail chain. That’s not to mention the earnings prowess the company has reported already just a month ago. According to tech Web site TechFlash, "Amazon was unusual in seeing significant traffic growth for Thanksgiving day. Of course, traffic doesn't necessarily translate into revenue, but it's the latest in a string of positive signs for the Seattle-based e-commerce giant, which most recently reported a big increase in its third-quarter revenue and profits."
This stock should get a chance to pop after more-solid Black Friday and Cyber Monday figures are released to Wall Street.
While the focus has primarily turned to higher-end retail chains as the economy improves, there’s still quite a bit of reason to keep an eye on the discounters right now. Big Lots (BIG) is a national closeout retailer that operates 1,339 stores in 47 states. And with earnings slated for Friday following one of the company’s highest-volume weeks, there’s plenty of reason to expect this stock to move higher as we get closer to the end of the week.
Traditionally a lower-margin operator, Big Lots has managed to maintain profitability since 2006 and has kept sales and profits strong despite the global slowdown. That’s been thanks largely to the fact that as many consumers tightened their purse strings, Big Lots and other similarly positioned retailers were an obvious choice for shopping.
And as investors agonize over what’s to come economically in the next several months, this stock remains a strong choice.
Diverging from the retail space a bit brings us to Marvell Technology Group (MRVL), a $9.73 billion semiconductor company that announces earnings on Dec. 3. The company has been benefitting from a growing wave of increasing investor and analyst sentiment, not to mention the benefit of historically beating pre-earnings expectations. That can only help things as we go into earnings week.
Marvell has been a high-growth chip manufacturer for a number of years, and its hard drive, smartphone and WiFi chips are very highly positioned in the highly competitive semiconductor industry. While some of the company’s sales growth has slowed amid the economic downturn, analysts are expecting those numbers to creep back up as conditions improve.
Friday should be telling for investors, who are hoping for profits of 26 cents this quarter.
For more stocks that made this week's cut, including Staples (SPLS) and NetApp (NTAP), check out the Rocket Stocks portfolio at Stockpickr.
At the time of publication, author had no position in stocks mentioned.
Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.
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