With all due respect to Fed watchers, it should be a stock picker's delight this week.
Some big-name companies are set to present at investment banks and conferences this week, against the backdrop of a Fed likely to leave rates unchanged. The Fed chairwoman has been talking tough during her press conferences and is likely to continue that pattern. I think there could be all sorts of good long and short trades worth playing in an otherwise slow summer week.
Here are a few of the names I will be watching.
Shake Shack (SHAK): The company presents at William Blair on Wednesday. Between you, me and the lamppost, I talked with Shake Shack CEO Randy Garutti last Friday afternoon. Location: the company's Madison Square Park restaurant, which is always jam-packed. RealMoney readers should be no stranger to my pro-Shake Shack stance from a business and stock standpoint. In my view, Shake Shack stands for something good in American business. You may think they are just turning out hamburgers and shakes in record numbers, but for me they are giving people skills not on offer elsewhere, as well as hourly wages that are best in class. The culture is one of winning, and not accepting second place. And those are messages I can get behind. I'll get on my soapbox and proclaim that the stock will eventually gain steam after being challenged virtually since the IPO six quarters ago.
My talk with Garutti reinforced my view that Shake Shack is still rocking. I think the negative Wall Street murmurs are flat-out wrong. It definitely knows what it is doing with its real-estate plans, and it has a clear vision as to how the brand should expand around the world. Although the stock may continue to tread water in the near term as Wall Street begs Shake Shack to go even faster with its expansion. But it won't, sorry guys ¿ the company is taking great care that it's doing things very right. With ongoing menu innovation, the company, to me, represents the next great brand in U.S. fast food. I think Wall Street is losing site of the long term on Shake Shack ¿ the company may well surprise everyone by how quickly it opens locations beyond 2020.
- Verdict: Buy
Church & Dwight (CHD): It has been quite a month for the household-products manufacturer. Most dramatically, it has sought to fend off rumors it was nearing a sale. Since the company is still speaking at Deutchsce Bank on Thursday, suffice it to say the company is not nearing a deal. I think Church & Dwight remains up for sale ¿ execs have made it well-known in the past that they think the brand is undervalued by the market. But I suspect execs will do their best this week to highlight product innovations and how they plan to execute them.
To me, that is a less-sexy story. Considering the heady valuation now on the stock, a premium based on the takeover talk, Church is not one I would get involved with right now. Moreover, I think the big-time private-label product push from Wal-Mart Stores (WMT) will prove negative for many consumer-products companies over the next year, including Church.
- Verdict: Avoid
J.C. Penney (JCP): CEO Marvin Ellison is coming to our neck of the woods (NYC) to present at Piper Jaffray on Wednesday. J.C. Penney, similar to many retailers, had soft sales in May. That was especially true for department stores. Earnings calls suggest June began on a slow foot, too. Lululemon Athletica (LULU), for instance, noted that sales in June have been mixed at best.
I think CEO Marvin Ellison will talk up what J.C. Penney is doing online and within the home category. Most notably, it is rolling out appliances to 500 stores. The Sephora expansion should also be top of mind. But Ellison is likely to leave one topic out in the discussion ¿ sales trends thus far in June. In my opinion, sales remain soft for J.C. Penney and other apparel retailers. The weather hasn't turned brutally hot as to spur summer-clothing sales. I believe retail is not due for a bounce until the July 4 sales begin.
- Verdict: Avoid
Electronic Arts (EA): The company's three-day EA Play event kicks off on Monday, coinciding with the annual videogame spectacle known as E3. I talked with EA's CEO Andrew Wilson last week ahead of the whirlwind of industry news. The feature is on TheStreet's homepage ... give it a read! The bottom line from this talk: Wilson is the man. Shares have surged since he was appointed as CEO in late 2010. The guy has cleaned up EA's culture and processes. He has also shown amazing progress on mobile gaming and direct downloads. I left our chat impressed with him, and I believe the company will run ahead of its rivals such as Activision Blizzard (ATVI) in virtually reality gaming, the next big thing. The company should also partake in the next console cycle that is about to kick into gear. Microsoft (MSFT) is likely to have new console news this week, and Nintendo (T:7974) in 2017. At this stage, we don't know if Sony (SNE) has anything to say.
- Verdict: Buy
Nordstrom (JWN): The luxury department store will also present at Piper Jaffray this week along with J.C. Penney. If I was part of Nordstrom management, I wouldn't even be showing up at this event. They are short on upbeat news that could reawaken a stock that has been battered by 48% in the past year. I don't believe Wall Street will buy into anything Nordstrom execs try to pitch. The Street will instead remain fixated on how poorly run the company is. It is one that is in bad need of a completely new team, sourced from outside.
- Verdict: Run far away
