The Daily Dose: Some Buy-Rated Stocks

 | Aug 07, 2014 | 11:00 AM EDT
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Anxiety is in the air, at least among the market insiders, just as Wall Street itself is buzzing with smiling tourists spending cash that a mom shopping at Wal-Mart (WMT) with just $5 in her wallet would love to have. Quite honestly, none of us has a clue where the market is heading next. We can only guess, based on perception and the careful studying of charts and numbers flowing through the Bloomberg terminal. But, bull or bear on the market at the moment, one still has to have an idea what to look for in individual sectors.

For example, within cruise line operators, many players have old ships lacking the attractions and efficiency of those with newer ships, helping to boost the latter's profits. I want to run through a couple things that are necessary to see upon selecting consumer companies as buy-rated stocks for the portfolio.

Specialty Retailers

Examples: Gap (GPS), Foot Locker (FL)

Attributes a buy-rated company must sport:

  1. over 50 store closures in the past three years, a number that could be sourced from the 10,000;
  2. an active remodeling campaign that goes beyond slapping new paint on the walls; there has to be fresh-looking fixtures and digital elements to the signage;
  3. a true omni-channel presence, meaning online orders are being satisfied to whatever degree from the physical stores.

Department Stores

Examples: Macy's (M), J.C. Penney (JCP)

Attributes a buy-rated company must sport:

  1. out with the endless racks of apparel and shoes, in with the best offerings that raise average ticket and profit margins;
  2. stores are being used as distribution centers;
  3. there are early signs of handheld experiences being created; for instance, you walk by a towel section and receive a promotional message on the iPhone.


Examples: Buffalo Wild Wings (BWLD), Chipotle (CMG), Brinker International (EAT)

Attributes a buy-rated company must sport:

  1. integration of online ordering, either upon restart entry or when sitting down at a table;
  2. sever tablets;
  3. investments being taken in emerging restaurants that have national potential.

Chart of the Morning: Wal-Mart vs. Personal Consumption Expenditures

Consumer confidence has surged this year. Walmart shares have done anything but surge, ditto Target (TGT) and most retailers. So, what is the TRUE state of the U.S. economy?

Source: Bloomberg

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we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
Large-cap, high-quality McKesson (MCK) is too cheap now, at $147.51 or so. The stock hit $243.60 more than 2.5...
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