Treat Yourself To An Early Christmas Gift

The Christmas season can be a time that makes or breaks a retailer's entire year. With that being said, most investors already know this information. It's not typical for a retailer's stock to experience a major pop or drop around the holiday season just because of revenue and earnings were three times that of the previous quarter.

But most reports currently indicate the American Consumer is healthy and feeling good. Which would indicate this holiday shopping season could be a record-setting year regarding the amount of money spent buying holiday presents. And a record-setting year is the type of event that would make a retailer’s stock pop. A large year-over-year revenue and earnings beat is the type of performance that Wall Street likes and rewards with a higher share price.

One report, in particular, the University of Michigan Consumer Sentiment Index was unchanged in November and remained higher thus far in 2018, at a 98.4, then in any prior year since 2000. Furthermore, the report indicates "income expectations have improved, and consumers anticipate continued robust growth in employment." "The renewed strength in nominal income expectations is critical to overall spending prospects. Among the working age population, those between the ages of 25 and 54, the anticipated annual gain in nominal household income was 3.6% in November, the best in the past decade" per the November report.

If the University of Michigan Consumer Sentiment Index is correct, we could be in for some really big number this holiday season. That being said, to fully realize the share price increase, it is best to buy the retailers before early holiday shopping reports are released. Obviously, by doing so, you take the risk of this year being an average or poor shopping season, but if you’re willing to take that risk, it could pay off nicely this year.

So, let's take a look at a few of the Exchange Traded Funds that you could purchase if you want to attempt to ride the retail waved this holiday season. Continue reading "Treat Yourself To An Early Christmas Gift"

Gold Stocks Couldn't Beat Gold

One year ago I shared with you the similar dynamics of the top gold stocks ranked by ROE. There were five tickers: ABX (Barrick Gold), SBGL (Sibanye Gold), IAG (IAMGOLD), GSS (Golden Star) and HMY (Harmony Gold Mining). I want to update on their price dynamics to show you which of your bets played out after one year.

Before we get down to the results, below is the distribution of votes for each stock for you to recall those bets.

gold stocks

For the second time in a row, the majority of you bet on Barrick Gold (ABX) despite that this company was among the top losers a year ago. Another interesting fact is that the Golden Star (GSS) was the least favorite, although it had shown the best result last time. This is what we call mysterious investors’ sentiment.

Chart 1. Gold Stocks Vs. Gold: Unmatched

gold stocks
Chart courtesy of tradingview.com
Continue reading "Gold Stocks Couldn't Beat Gold"

U.S. Crude Production Shows No Signs Of Bottleneck

The Energy Information Administration reported that August crude oil production averaged 11.475 million barrels per day (mmbd), up 129,000 b/d from August. The gain was led by a 106,000 b/d increase in Texas, a 64,000 b/d rise in North Dakota and a gain of 24,000 b/d in Mexico. Seasonal factors affected the overall gain, as production fell by 147,000 b/d in the U.S. Gulf and rebounded by 43,000 b/d in Alaska.

permian basin

The EIA-914 Petroleum Supply Monthly (PSM) figure was 438,000 b/d higher than the weekly data reported by EIA in the Weekly Petroleum Supply Report (WPSR), averaged over the month, of 11.037 mmbd. Continue reading "U.S. Crude Production Shows No Signs Of Bottleneck"

Hasbro Stock Struggling To Find Footing

The retail cohort reported a mixed bag during the most recent earnings season with Target (TGT), Khol’s (KSS), Gap (GPS), WalMart (WMT), Best Buy (BBY) and the Retail ETF (XRT) all experiencing downward pressure. This pressure has been exacerbated by the market wide sell-off in the broader indices. Hasbro (HAS) has struggled to find its footing moving into its historically biggest quarter. Hasbro is setting the post Toys R Us bankruptcy narrative and laying out a business roadmap for long-term profitable growth across its brands. The headwinds attributable to the bankruptcy of Toy R Us appear to be subsiding. This sentiment has been further bolstered by positive commentary from its CEO that the company will absolve itself of this Toy R Us related bankruptcy headwind come 2019. As Hasbro realigns and effectively manages the Toy R Us liquidation, this challenging backdrop is beginning to resolve itself to Hasbro's benefit. There are many current and future growth catalysts for Hasbro in movie franchises such as Marvel, Star Wars and other Disney (DIS) properties (Hasbro is the exclusive toy maker). Potential e-sports with Dungeons and Dragons and Magic: The Gathering, newly acquired Power Rangers franchise which will emulate Hasbro’s My Little Pony and Transformers’ Bumblebee within Hasbro Studios and its legacy games such as Monopoly and Nerf. Hasbro may benefit from a strong consumer, record low unemployment, a strong and growing dividend yield, clear skies post Toy R Us liquidation and putting forth initiatives within Hasbro Studios to further propel growth thus presenting a compelling long-term buy.

E-Commerce Channels Mitigating Toys R Us Bankruptcy

Analysts are predicting e-commerce toy orders to balloon to 40% of overall sales this year, up from 28% last year. Since Toys R Us has gone bankrupt, this puts a void of ~14% of last year’s U.S. toy sales that needs to be bridged, translating into $2.5 billion in revenue. This void will likely be filled by Target, Walmart and Amazon (AMZN) which recently, for the first time it will offer free shipping to everyone through the day before Christmas with no minimum purchase required. Per Jefferies analyst Stephanie Wissink, 70% of toy sales occur during the holiday season. Target and Walmart have announced expanded free-shipping programs of their own to drive online sales. Wissink sees Hasbro’s stock hitting $120 within a year and notes that the overall set-up for 2019 looks better than 2018. As other retail chains close the gap with the Toys R Us vacancy, Hasbro will likely return to form and growth across its brands. Hasbro has one more quarter to report earnings in which the Toys R Us issues will be impacting its numbers. 2019 will be free of this headwind, and all numbers will come full circle and be compared to post Toys R Us landscape. Continue reading "Hasbro Stock Struggling To Find Footing"