Take Not Thyself Too Seriously
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The Great Recession has been over for some time now (though many people are still out of work) and several sectors are benefiting from the recovery. One of them is retail, which was hard hit in 2008-2009 when many people closed their wallets and stopped spending.
In April, same-store retail sales in the U.S. topped analyst expectations and rose 8.9% on average, one of the largest increases in the last few years. Same-store sales are an important indicator of a retailer’s internal health, so the big jump indicates that people are shopping again.
And lately, many great retail stocks have been popping up in the Cabot newsletters.
One of the leading retails stocks is Lululemon Athletica (LULU). I’ve written about LULU many times before, but the company’s yoga-inspired apparel is so red hot that the company has experienced inventory shortages.
This will likely affect first quarter sales growth a bit. That said, limited supplies also can add urgency, inducing shoppers to buy full price items more quickly for fear they won’t be around for long.
Wall Street expects Lululemon to report a 31% jump in Q1 sales over last year, to $180.9 million. It’s a solid gain, but still below the sales growth of the last five quarters. Analysts expect to see same-store sales growth up a strong 14% with revenues rising a solid 41% to 38 cents per share.
These numbers are good, but only time will tell how the stock will react. I still like LULU, but it has come a long way and with the market chopping around, it may need a rest before it takes off again. In the meantime, subscribers to Cabot Top Ten Trader have nabbed profits of over 125% since the stock was recommended in September 2010.
In late November 2010, I recommended Cabot Top Ten Trader stock Under Armour (UA) and since then, the stock is up 85%! And Editor Mike Cintolo still recommends it as a hold.
Under Armour has remained one of the leading retail stocks because of its accelerating sales growth, strong earnings gains and the view that it can challenge Nike as the king of athletic apparel.
Going forward, Under Armour should see improved sales from its footwear line and new Charged Cotton clothing, which combines cotton and the company’s moisture-wicking technology. Many on Wall Street think this innovative apparel will be a big seller for the company.
I wrote about Abercrombie & Fitch (ANF) two weeks ago and since then, the company reported strong first quarter fiscal results. The company’s Q1 net income came in at $25.1 million, or 28 cents per share, vs. a loss of $11.8 million, or 13 cents per share in the year ago period.
Abercrombie is known for its pricier teen clothes and was hurt badly in the recession, but same-store sales have bounced back nicely. Revenue at stores open at least a year jumped 10% in February through April vs. a year ago.
International revenue soared 64%, boosting the company’s overall revenue 22% to $837 million. And this should only continue because the company has plans to open several more stores overseas in the near future.
ANF took off in early April on huge volume. Since then, the stock has worked to build a base in the mid-70s and hasn’t given back any of its gains. ANF reacted well to its earnings report and if the market stabilizes, I think the stock can go far.
You could buy LULU, UA and ANF here and hope for the best, or you could subscribe to Cabot Top Ten Trader, where you’ll get Editor Mike Cintolo’s latest recommendations on these and other leading stocks. With the market in less than robust health today, I know what I’d choose. Learn more here.
Now for this week’s button. Remember that you can see all of them by clicking here.
Take Not Thyself Too Seriously
Good advice. It helps prevent the risks of pride and arrogance. It helps you maintain a disposition toward learning from others. And it makes you more enjoyable to other people. In their timeless drama, the ancient Greeks repeatedly warned against the dangers of hubris. It’s a warning that all of us should still heed, in our personal and investing lives.
In this week’s Stock Market Analysis Video, Cabot Market Letter Editor Mike Cintolo says the market found some support this week, but the overall trend remains negative. Mike thinks you should be taking a break from active trading and focus on building your watch list. Mike also discusses how to determine which stocks are likely to be the leaders of the next upmove. Stocks discussed: MercadoLibre (MELI), Wynn Resorts (WYNN), Fortinet (FTNT), Abercrombie & Fitch (ANF) and Lululemon Athletica (LULU). Click here to watch the video!
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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.
On Monday, Cabot Publisher Timothy Lutts discussed why his recent visit to the Ukraine and a slew of personal experiences led him to conclude that corruption is hobbling the country’s economy. Tim also discussed a stock he thinks will be the next Coca-Cola (KO). Featured stock: Green Mountain Coffee Roasters (GMCR).
On Tuesday, we heard from Carla Pasternak, editor of StreetAuthority’s Dividend Opportunities. Carla discussed three warnings signs to look for when trying to spot a dangerous dividend.
On Thursday, Cabot Market Letter Editor Mike Cintolo discussed the stock market’s recent action and why he thinks we’re in the beginning of a correction. Mike also discussed the importance of building a watch list during this period so you’re ready to invest when the tide turns. Mike also included two videos in which he discusses market timing, Cabot’s system and some correction-proof stocks. Featured stocks: Green Mountain Coffee Roasters (GMCR), Baidu (BIDU), MercadoLibre (MELI), Priceline.com (PCLN), Abercrombie & Fitch (ANF) and ProShares Ultra Russell 2000 (UWM).
Until next time,
Editor of Cabot Wealth Advisory
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