I know we can never say, "Forget about today, it means nothing." Every day means something. But I am going to ask your indulgence and say that some of the retailers that were down today shouldn't have been because they are precisely what is and should be working at this point, both in the economic and Internet spin cycles.
I am talking about Home Depot (HD) and TJX (TJX).
They both reported blockbuster earnings this morning and were initially greeted with sharply higher pre-market prices. The stocks of both companies, however, could not withstand the gravitational pull of the market and, in Home Depot's case, some mistaken impressions of what was said on their calls, and they fell prey to profit-taking.
Why do I say profit-taking and not outright selling?
Because yesterday in the non-event session that was driven mostly by sharply higher oil -- remember those days? -- both stocks rallied and rallied hard. That stole whatever thunder they could muster today and they didn't react as they should have.
Let me say, first, that if you read through the Home Depot call as opposed to just taking your cue from the market price, things are pretty darned strong. I like to quote from the conference call because, unlike most of the jokers who were dumping the stock, I don't like it when the facts get in the way of the stock story, which is, summed up succinctly, by brilliant CFO Carole Tome: "While U.S. GDP forecasts had pulled back slightly since we built our 2016 sales plan, we continue to see strength in the housing market with home price appreciation, housing turnover and household formation trending where we thought they would. Sales in the first quarter," she goes on to say, "exceeded our expectations not just because of favorable weather but because of higher demand for many of our core product categories."
That, in the end, is what matters. Tome is telling you that things are strong and will stay that way as housing formation and home appreciation are the two main variables to measure HD's ultimate growth rate. As more households are formed, more people will take apartments or buy houses. They will then go to Home Depot, as they always have. Meanwhile, if homes are going to continue to appreciate, then homeowners will buy merchandise to make them even better -- call it home improvement -- and they will regard those purchases as investments, not expenses.
In other words, all is good.
How about TJX? Here we see the same thing except in some ways even better. First, the store sales are much better than expected. In fact, Homegoods, the amazing store for, well, home goods -- they make it pretty easy to figure out -- actually reported sales that were twice as good as anyone was expecting -- 9% instead of 4.5%. Plus, unlike Home Depot, which tends not to put up new stores, TJX is expanding all over the globe. And its sourcing, which relies in part on vendors who have goods to sell from other retailers that can't move the merchandise, has never been better.
Perhaps more important: Unlike last week's department store retailers, these two are far less susceptible to the Genghis Khan of retailers, Amazon (AMZN). TJX can mark up goods that it bought from retailers with too much inventory, and still come under Amazon's prices. Home Depot's goods, whether they be appliances, hardware or plants and planting accoutrements, just don't get Amazon'd. In other words, these do not suffer from the Wrath of Khan! (Amazon is part of TheStreet's Growth Seeker portfolio.)
So, let 'em come in. No jury. Lots of anxious sellers out there. Just remember that not all stocks pull back because something's wrong at the company. In fact, in this market, stocks get seesawed back and forth often with nothing happening at the company. So next time the seesaw falls, these are two you want to climb on to, not stumble from.