When you spend $100 billion as consumers did in China during Alibaba's (BABA) Singles Day, you have a real needle mover for many U.S. companies. If you see companies that have sold a lot that day you are tempted to buy them.
The problem is that stocks are rarely that simple. You don't want to buy the ones that sold the most, you want to buy the ones that are doing well that sold the most.
We know that Apple (AAPL) sold a ton of product, but this one sits in the category of "it better have sold a lot" so I would not buy the stock on anything Singles related. I would buy it on early reads about product ordered but that's an entirely different story.
North Face sold plenty. That means you could theoretically buy the stock of V.F. Corp. (VFC) . However this stock just jumped 10% on the strength of the vaccine, it's biggest move in 33 years. That's too big a move. Tack on the fact that they just bought Supreme, a cult streetwear fashion brand, for $2.1 billion - modestly accretive - and you get a stock that I think is ahead of itself.
Under Armour (UAA) sold well as did Nike (NKE) . The former might be able to leverage those sales into something big. I am partial to the company but we need to see how holiday sales are here. Nonetheless I think that you can bet that this time it is different. The company has really come back to its core and I really like the mask.
Which brings me to the two that I would actually buy off Singles Day: Nike and Estee Lauder (EL) . Eighteen percent of Nike's business is in China. What happens if that business gets a bump from Singles Day? I think it is something for the analysts to raise their numbers from. The stock is off its high and Nike is a "re-recommend" stock, meaning that analysts cannot resist finding a data point to boost the stock again.
And then there is Estee Lauder. China is becoming more and more important to the Estee Lauder mosaic. There is a tremendous misperception about the make-up of Estee Lauder's business. There are so many people who believe that its sales are anchored by mall based department stores. But the company pivoted from those dinosaurs ages ago, opting to go where the customers are including Ulta (ULTA) , which now includes Target (TGT) as a customer. Mary Dillon, CEO of Ulta, told us to expect prestige brands to be sold at their Target Ultas and that's fantastic news for Estee Lauder which thrives on new doors.
But it is the masked face China that offers the best opportunity. I think the most popular favorites for Singles Day are their most expensive product, the ones with huge gross margins like luxury skin care brand La Mer, as well as their new fragrances with super strength like Jo Malone and the company's Advance Night Repair products.
Why do I focus on these? Because it is a lesson in how to look at stocks from the analysts' point of view. They are desperate to say something here that is not related to the virus. A company that is levered to a country that has triumphed over the virus using masks, is a company where the numbers are way too low.
I think that the mask is something that China has used effectively more than any nation on earth save Taiwan which found out the hard way that they work: the SAARs epidemic. For the longest time the driver of Estee Lauder's sales was cosmetics. Now it is the other portion: skin care. I predict that the analysts will fall all over each other to raise numbers here. Buy it before they do.
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