Seeking Alpha
Long only, medium-term horizon, tech, solar
Profile| Send Message| ()  

The Christmas selling season has a set pattern.

Before Thanksgiving there are stories worried about how the season will go. Once it starts, there are stories saying things are great. In the middle of the month, more stories of worry. Near the holiday, more stories of optimism. Then, sometime in early January you get the final results, which turn out to have been in line with the original expectations.

We're now in stage two of this story - business is great. It's especially great online - never mind that most of that is probably taking share from brick-and-mortar.

Fact is that on the Friday after Thanksgiving you can find crowds everywhere - even at a Microsoft store.

The truth is that what we thought would happen before this started is most likely going to happen. Overall sales will be slightly higher. Most trends among retailers, and brands, will remain intact. That means you don't want to get into JC Penney (JCP) and -- if you bought the hype last year -- use any signs of strength to get out of it. It means TJ Maxx (TJX) may be worth keeping because its October same-store sales were strong.

It means that Costco's (COST) growth days are not over, as Street Authority seems to believe. The company has a solid niche in the upper middle-class, which has been doing great this year. That's why I'm skeptical of Target (TGT) and would sell on strength - their niche is in lower-income markets that aren't doing as well as Costco's market.

The point is most of what you are going to see this month, among retail stocks, is going to be a head fake. Everyone will say they're doing well, but those who are doing best have done well all year. So don't be fooled.

Full disclosure. I don't buy many retail stocks. I look for long-term value in the space, and don't like its volatility. My one holding, bought last year, is Costco, and it has done very well for me. I expect that to continue.

Source: Look For Retailers To Sell