Who said retailers were in trouble? Sure, some of the big department stores are having major problems operating in an Amazon (NASDAQ:AMZN) world, but there are others assimilating much better. Take Best Buy (BBY) for example, which soared more than 21% on Thursday after a strong quarterly report that included a positive surprise, higher same-store sales and an upbeat outlook. And the consumer electronics giant wasn’t the only winner today….even beleaguered Sears (SHLD) gained by more than 13% on its first profit in nearly two years.
Such strong results from an industry that concerned many investors helped to push the major indices to their sixth straight day of gains. The S&P was up 0.44% to 2415.1 and the NASDAQ increased 0.69% to 6205.3. Both of those indices are now at record highs. The Dow advanced 0.34% to nearly 21083.
The portfolios saw a triple-digit winner out of Options Trader today, while RTA, Value Investor and Insider Trader all added. The highlights section below has more:
Today's Portfolio Highlights:
Options Trader: Zebra Technologies (ZBRA) has surpassed Kevin’s first measured price target of $102.90, but it has also slipped to a Zacks Rank #3. With a three-day weekend approaching, the editor thought this was a good time to sell to close the August 105.00 call in ZBRA and bank an impressive 129% return. He still really likes the stock and may take another position somewhere down the road, but Kevin is happy taking a triple digit winner for today.
Value Investor: Tracey likes niche tech players in the content area, so TiVo (NASDAQ:TIVO) is right in her wheelhouse. This “content discovery” business came onto the scene through their groundbreaking DVR devices nearly 20 years ago, but has since expanded through its merger with Rovi. Though facing its fair share of litigation in a tough industry, TIVO continues to enter into agreements with content creators and has 23 million subscriber households in 70 countries. Earnings are expected to rebound by 48% next year. With shares down 17% in just the past month, the stock is now in the editor’s value universe, so she added this Zacks Rank #1 on Thursday. There’s lots more in the full write up.
Reitmeister Trading Alert: Shares of Hawaiian Holdings (HA) are off their peak by about 20%, but this well-performing airline has a pretty consistent pattern of rising then selling off then rising again. Steve thinks this is a great time to buy this Zacks Rank #1 before the next ascent. The approximately $50 stock has price targets as high as $60 or more, so there’s plenty of running room. The editor added a 6.7% allocation in HA on Thursday, but first he made some room by trimming the Royal Caribbean (RCL) position and banking a 6.3% return.
Meanwhile, history is repeating itself with MasTec (MTZ). Shares of this infrastructure construction company recently got shellacked after a disappointing guidance from industry peer Dycom. This is exactly what happened with DY’s Q3 report, which was followed by solid earnings from MTZ. The editor won’t be fooled, so he used the recent pullback to buy more shares of MTZ at a discounted price and bring the total allocation up to 7.3%. The full commentary has more info on today’s moves.
Insider Trader: Disappointing second-quarter comps have taken a big toll on specialty retailer Sally Beauty (SBH), which is currently at 5-year lows. However, the CEO obviously thinks the stock is oversold because she bought shares of her own company three times this month. Tracey considers this a “confidence” buy and agrees with the oversold story, so she used the cash from selling WGO to pick up SBH for the portfolio. Read a lot more about this new addition in the full commentary.
Surprise Trader: "And in a continued surprise, we have seen several companies in some of the most beaten down segments of the consumer market—namely apparel and electronics—do pretty well as of late. Today saw Guess outperform, while we have seen others in this space—such as Abercrombie—post decent earnings too. Meanwhile, Best Buy was up double digit percentage levels today, and continues to defy all expectations in what I thought was an impossible business.
"Maybe retailers are finally starting to figure things out and how to compete in a more online-centric world? Certainly not all will survive, but firms like Best Buy and others are definitely figuring out how to stay relevant, and even thrive, in this new market environment. No matter what you think, you have to agree that the CEO of Best Buy deserves a raise! The turnaround there-- especially given that most thought the company had no future-- is nothing short of incredible. -- Eric Dutram
Until Tomorrow,
Jim Giaquinto
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