Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

4 Overvalued Retailers to Avoid in April

Stock MarketsApr 22, 2021 05:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. 4 Overvalued Retailers to Avoid in April

Low foot traffic and a booming e-commerce industry have compelled many retail companies to create strong online portals and delivery systems to stay afloat in the “new normal.” However, the progress made here by many retailers and an expected revival of foot traffic with the reopening of the economy have attracted significant investor attention to retail stocks, in some instances leading to a disconnection of their price levels from their fundamental strength. Considering their fundamental strength and near-term growth prospects, we think Lululemon Athletica (NASDAQ:LULU), V.F. Corporation (VFC), Burlington Stores (NYSE:BURL), and Burberry (BURBY) now look significantly overvalued. So, it’s wise to avoid these stocks.After suffering a major setback from a near halt in store sales and strong competition from existing e-commerce players in the first half of last year, many retail companies have now adopted online platforms and efficient delivery mechanisms to stay afloat. Now that the economy is reopening, these companies’ brick and mortar stores sales have started recovering too. Furthermore, the $1,400 direct stimulus checks paid out by the federal government have contributed to a favorable backdrop for retailers through increased consumer spending.

These factors have buoyed investors’ optimism about the retail space over the past few months. This is evidenced by the SPDR S&P Retail ETF’s (XRT) 70.5% returns over the past six months versus SPDR S&P 500 Trust ETF’s (SPY) 21.4% gains over this period.

However, many retail stocks have moved too far too fast based solely on investor optimism, and their financials and growth prospects don’t justify their current price levels. With weak fundamentals and growth prospects, Lululemon Athletica Inc. (LULU), V.F. Corporation (VFC), Burlington Stores, Inc. (BURL), and Burberry Group plc (OTC:BURBY) currently look overvalued. So, we think they are best avoided now.

Continue reading on StockNews

4 Overvalued Retailers to Avoid in April
 

Related Articles

U.S. Senate votes to open debate on China tech bill
U.S. Senate votes to open debate on China tech bill By Reuters - May 17, 2021

By David Shepardson WASHINGTON (Reuters) - The U.S. Senate voted 86-11 Monday to open debate on a measure authorizing more than $110 billion for basic and advanced technology...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email