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It’s no secret that I haven’t been the biggest fan of retail. That is not an indictment of the US consumer by any means. Rather, it’s a strike against old school brick-and-mortar malls with nothing to offer shoppers. What’s fun about shopping is not the actual function of walking into a store and making a purchase but rather the experience associated with the mall you are in. Does is have fancy shops? Are there neat things to look at? Is the movie theater awesome? Is the mall clean? Is it bustling with people?
Nobody wants to go out to a deserted mall in the middle of nowhere with two terrible choices in the food court and spend a day shopping. The malls that are doing well in America are the ones that offer a superior shopping experience. They are in desirable locations where the destination means something. That’s why I’ve been on a mission to talk about avoiding stocks like Sears (SHLD - Free Report) and JC Penny . I just don’t see them as having a meaningful enough experience to draw shoppers into the stores. You don’t have to take my word for it, just look at the numbers.
Another retailer that’s worrying me lately isn’t an old school brick-and-mortar player with the longevity of Sears or JCP. This is the relative newcomer and much more upscale Michael Kors . KORS is a Zacks Rank #5 (Strong Sell) in an industry that currently ranks in the bottom 14% of our Zacks Industry Rank. Despite a great earnings report last quarter where the company beat expectations by 7 cents, KORS has seen analysts drop their estimates for the current quarter, next quarter, the current year and next year.
The bearish analyst sentiment is most obvious when you look at the current quarter and next year earnings estimate trends. The Zacks Consensus Estimate for the current quarter has dipped from $1.77 to $1.62 for the current quarter and has plummeted from $4.80 to $4.48 for next year. That next year number, when compared to the current year, is offering up EPS growth of only 1.88%.
The stock has been chopping back and forth in a range between $45 and $52 since early August of this year. Over the last could of months, the stock has seen a couple of lower highs carved out while constantly retesting the $45 bottom. A break below $45 puts the May lows in the $40 handle back in view. I suspect one disappointing report could take the stock below the $40s.
More Stocks to Sell. Now.
Beyond our Bear Stock of the Day, today's list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.
Image: Bigstock
Bear of the Day: Michael Kors (KORS)
It’s no secret that I haven’t been the biggest fan of retail. That is not an indictment of the US consumer by any means. Rather, it’s a strike against old school brick-and-mortar malls with nothing to offer shoppers. What’s fun about shopping is not the actual function of walking into a store and making a purchase but rather the experience associated with the mall you are in. Does is have fancy shops? Are there neat things to look at? Is the movie theater awesome? Is the mall clean? Is it bustling with people?
Nobody wants to go out to a deserted mall in the middle of nowhere with two terrible choices in the food court and spend a day shopping. The malls that are doing well in America are the ones that offer a superior shopping experience. They are in desirable locations where the destination means something. That’s why I’ve been on a mission to talk about avoiding stocks like Sears (SHLD - Free Report) and JC Penny . I just don’t see them as having a meaningful enough experience to draw shoppers into the stores. You don’t have to take my word for it, just look at the numbers.
Another retailer that’s worrying me lately isn’t an old school brick-and-mortar player with the longevity of Sears or JCP. This is the relative newcomer and much more upscale Michael Kors . KORS is a Zacks Rank #5 (Strong Sell) in an industry that currently ranks in the bottom 14% of our Zacks Industry Rank. Despite a great earnings report last quarter where the company beat expectations by 7 cents, KORS has seen analysts drop their estimates for the current quarter, next quarter, the current year and next year.
The bearish analyst sentiment is most obvious when you look at the current quarter and next year earnings estimate trends. The Zacks Consensus Estimate for the current quarter has dipped from $1.77 to $1.62 for the current quarter and has plummeted from $4.80 to $4.48 for next year. That next year number, when compared to the current year, is offering up EPS growth of only 1.88%.
The stock has been chopping back and forth in a range between $45 and $52 since early August of this year. Over the last could of months, the stock has seen a couple of lower highs carved out while constantly retesting the $45 bottom. A break below $45 puts the May lows in the $40 handle back in view. I suspect one disappointing report could take the stock below the $40s.
More Stocks to Sell. Now.
Beyond our Bear Stock of the Day, today's list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.
See today's Zacks "Strong Sells" absolutely free >>.