The "better" thesis is breaking out all over today. Obviously, it starts with the department stores, where Macy's (M) and Kohl's (KSS) reported better-than-expected numbers and the stocks are off to the races.
Sure, the absolute numbers are nothing to write home about. But the relative numbers vs. expectations are exciting (and exactly what JPMorgan's Mathew Boss said would happen when he slapped a trading Buy on Macy's that I talked about here just a few days ago).
Sometimes that's all that matters. That and the linear progression as each month was better than the previous at Macy's. The company is also taking out capacity, closing 100 marginal stores, showing me they are getting very serious about profitability, which is a godsend.
Kohl's is the same story. Not good. Just not as bad with, like Macy's, a positive spin on the back-to-school season. That always keeps things going.
Immediate thoughts: Inventories must get leaner, so return again to Lauren (RL) . PVH (PVH) and VF Corp. (VFC) are doing better, too. Under Armour (UA) and Nike (NKE) seem to have recovered from the over-inventoried position from Sports Authority's surprise closing. (Under Armour is part of TheStreet's Growth Seeker portfolio.)
At what point, though, are these overly discounted? I think the trade can last through Nordstrom (JWN) and J.C. Penney (JCP) , which reports tomorrow, in part because you are still seeing short-covering that was put on after Gap GPS.
However, as I have said for days, these are all trades and they are already being heavily exploited. The investments are the frugal consumer plays: Costco (COST) , TJ (TJX) , Dollar General (DG) , Dollar Tree (DLTR) .
What else is better?
How about China? It might be better because Alibaba's (BABA) numbers are so strong that you have to figure there's a pickup in spending. Sure, maybe it is just that they have figured out mobile, but you don't get that kind of acceleration in business unless the 434 million accounts are spending more. Sixty-percent growth is part BABA and part China and the latter says it's OK to buy Yum Brands (YUM) , Starbucks (SBUX) and perhaps, ever so slightly, Apple (AAPL) , even as we know low-end phones are allegedly taking share there. I don't think Alibaba's Joseph Tsai would have blurted out Apple to me as glibly as he did without my picking up a read-through. There are two separate analyst notes out there today about how the iPhone 7 might be better, but they are lukewarm endorsements. Bulls have to hope they stay that way as we know low expectations and marginal surprises are working better in this market than high expectations that are then beaten handily. (Costco, Starbucks and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
Other "better" stories? Brinker (EAT) of Chili's fame makes you feel better about casual dining, a segment that has been trashed of late. Circle back to Darden (DRI) ? Not a bad idea. I like Dave & Buster's (PLAY) , which could also use some of the bigger-format stores that Macy's is abandoning. Natural locations for them. Something good brewing there.
But we have to be mindful that Shake Shack's (SHAK) tougher. Go listen to the call. The analysts are questioning everything now. The stock's too expensive on a per-unit basis.
Better. A decent story line for the day.