Macy's (M) stock is slipping on Wednesday but investors shouldn't worry. Instead, it could signal a buying opportunity.
The stock was down by nearly 5% to $34.02 as of 1:30 p.m. ET, a strange move given a strong earnings release and raised guidance into the holiday season prescribed by CEO Jeff Gennette.
"Good luck finding something wrong with the earnings release," Jan Kniffen, president of retail investment consultancy J Rogers Kniffen Worldwide Enterprises told Real Money . "I thought it was a damn good release."
He noted that the stock decline is especially strange given the strong short interest in the stock.
"Usually when there is big short interest heading into earnings and we see a beat like this, the stock will spike, not the other way around," Kniffen said. "The only thing I could see making sense is some kind of technical signal."
Entry Point
The seemingly irrational reaction of the stock might provide an attractive entry point for opportunistic investors in the near term.
"People hate Macy's. It's ridiculous," Jim Cramer said Wednesday morning on the floor of the New York Stock Exchange. "I think Macy's is inexpensive, I think Jeff Gennette is doing a great job."
He noted that he remains confident heading into the holiday season which should lift the stock into the fourth quarter.
"I'm fine with Macy's," Cramer concluded.
Home Depot's (HD) stock trajectory could provide a blueprint for Macy's direction into the key season. Home Depot has been remarkably consistent, marking stock runs into Black Friday for over 30 years straight.
While Macy's has not been that stunningly consistent, but each of the five Novembers have provided positive results for the stock, even amidst its steep slide from 2015 to 2017.
Analyst Action
Analysts are largely holding fast to their "Hold" ratings amid the oddball action in the stock.
"I really can't explain why the stock is moving down so quickly," Atlantic Equities analyst Daniela Nedialkova told Real Money. "I'd rather let the stock settle to comment more firmly."
She explained that the move so out of step with the results makes it difficult to offer a simple explanation and it may take time for the move to sort itself out.
She issued a "Hold" rating in research published on Wednesday morning.
Her rating is in step with the consensus, as five of six analysts publishing research in November have issued "Hold" ratings, waiting for more proof that 2018's run can continue and continue to justify increased SG&A spend.
Opportunity Ahead
Still, the consensus price target of analyst research published in the last month stands at $39 per share and there are no analysts issuing a "Sell" rating. A run to the consensus would offer a double-digit premium to investors if accurate.
If the Macy's turnaround is something that investors believe in, which earnings results, executive comments, and sales trends suggest is still underway, a slide right before the holidays seems as opportune a time to buy as ever.
While it may be a strange slip that is puzzling experts, Macy's Wednesday's slide could be end up being an opportune time to stuff your Turkey and your stockings with Macy's stock.
