Now that the Nordstrom (JWN) family is closing in on a buyout aided by the private equity firm of Leonard Green, will there be a revaluation of retailers in the stock market?
I know there are not supposed to be such things as stupid questions, but this is one, because the revaluation has been going on for weeks now. I am not just talking about the comeback by the likes of Costco (COST) post Amazon (AMZN) buying Whole Foods (WFC) or Home Depot (HD) after the announcement of the crucial Sears-Kenmore-Amazon offering.
While everyone revisited the negative thesis after Kroger KR told you last week that it's way behind where it needs to be to compete and that guidance is the least of its concerns, there have not only been green shoots, but actual fruits and vegetables, akin to those in my garden being feasted on right now by the brave.
Consider the stock of Dollar Tree (DLTR) . Two months ago, it was at $66. Now it's at $83. It made me pause and wonder: What exactly was the existential threat facing this chain, given that it put up some pretty terrific numbers when it last reported? That 2.4% comp number when people were looking for 1.6%, that terrific earnings beat and the fact that there's still a lot of low-hanging Family Dollar fruit to pick told a great story.
Or how about Action Alerts PLUS charity portfolio holding TJX Companies (TJX) ? Can someone tell me how come this stock is still in the low $70s after that terrific quarter with a super guide? I can tell you the answer: because somehow, it got to the high $60s even as there are more close-out materials available than ever.
I think the stock's really only been going up because of the new Homesense home furnishing concept that's being rolled out right now across America, with the first two stores, one in Massachusetts and the other in New Jersey, opening to big crowds and rave reviews. Given that it is opening another 100 Home Goods stores, the company clearly expects no cannibalization. It's not just a me-too Bed Bath & Beyond (BBBY) , either. It's better, with a quirky general store throwback feel.
Or how about The Gap (GPS) . I know a lot of people scoffed when JP Morgan's Matthew Boss came on Mad Money and recommended Gap at $20 not that long ago. If I hadn't just spent $200 at what many regard as the flagship San Francisco store the previous month, I would have, too. But with the stock at $27, and I think going higher, no one's laughing now.
I've been pounding the table on the new Kohl's (KSS) as a strip mall alternative that's got real loyalty and reliability. I didn't expect an Amazon tie-up like the "smart home experience" that it is rolling out in 10 of its stores, and I don't know how much more there will be to it beyond the 1000 square feet being allocated.
That said, how could you not like a company with a monster buyback, huge customer retention, inexpensive prices, a newfound love of brands like Nike (NKE) and UnderArmour (UA) , as well as what was then a 6% yield?
The tape is riddled with the stocks of retailers that should never have been down that are bouncing back hard: The Childrens Place (PLCE) now that Gymboree is waning, Ross Stores (ROST) and Burlington (BURL) , as nothing was ever wrong with off-price to begin with. And we've got some trading bargains, with names like Macy's (M) and Lowe's (LOW) that shouldn't be sniffed at.
But the most important takeaway is to recognize what Leonard Green recognized: retail's not going away, it's just going to different places. Those that can handle one less trip to the mall each month will make it. Not as far as you would like, but, in many cases, certainly further than they've gone already.