Like everyone else, I've been out and about the past few weeks, searching for those perfect holiday gifts. I've been to a variety of different malls, strip malls, superstores, and websites. I've even read some analyst calls to get a sense of what they are experiencing this holiday season. Given all of that, here are mine, and some analysts, seven have and have nots during this holiday season.
The Must Owns:
Apple (AAPL): I've been past one Apple store so far and heard some reports from others. The iPhone is doing extremely well this holiday season, and I don't think that is much of a surprise. However, I'm not getting a good read on the iPad. While the iPad had heavy market share last quarter in the tablet arena, the Kindle Fire has done extremely well (more on that later). iPod sales are down year over year, but that line is a relatively small portion of sales. Mac sales are at all time highs, and being that Apple has just a small portion of the computer market, there is plenty of room to grow.
Analysts have been increasing their estimates for the company, up by six cents in the last month. The quarterly estimates are rising slightly, while full year estimates for this year (ending September '12) and next (ending September '13) are rising more on a percentage basis. Apple products remain hot holiday items, and the stock should be as well.
Amazon (AMZN): As always, I do a fair portion of my holiday shopping online. With the exception of one gift, I purchased everything on Amazon. But Amazon's holiday season will last into the next quarter, as it will then hopefully cash in on the million plus Kindles it is selling each week. Remember, on the physical devices it sells, Amazon is barely-to-not profitable. The company makes its money when you buy e-books and other higher margin items from it.
Amazon's stock, however, took a hit after last quarter's earnings report when the guidance was not great. The valuation remains extremely high in terms of earnings, but not in terms of sales. On Wednesday, the stock hit its lowest point in months at $170, but rebounded nicely from that point. I do still hold the stock in my model short portfolio, but I will probably cover that in the next week or two. I think Amazon is going to have a great holiday season in terms of sales, but that doesn't necessarily mean that it will translate into earnings.
Boston Beer (SAM): Surprisingly, one of the things I've seen selling extremely well this year is the Sam Adams Holiday Collection. This 12 pack of beer contains six different varieties of the craft beer maker's award winning collection. This company is the largest craft brewer in the country, and still has plenty of room to grow. The stock is near all-time highs, and has held up extremely well recently, even during big down days. The company is improving margins and increasing sales, so this name will continue to grow. I'll have a full article out on the company early this week, so be sure to look for that if you want a more detailed analysis of the brewer.
The Stay Aways:
Best Buy (BBY): Best Buy is feeling the pinch from online retailers, especially from Amazon. The company lost 15.5% the other day after it announced its quarterly report. Earnings were down more than 20% year over year, and gross margins declined by 80 basis points. I've been to my local Best Buy a couple of times in recent months, and I haven't seen the store this empty in years. There were a number of analyst downgrades this week after the report, and comparable store sales are expected to be flat to down this year. Analysts have taken down this year's estimates (ending February '12) by a couple of pennies, but the big hit is next year's earnings estimates, which have come down from $3.90 to $3.75 in the past week alone.
Deckers Outdoors (DECK): Deckers, which is known for its UGG brand of boots, took a hit this week after an analyst downgrade. A Sterne Agee analyst downgraded the stock from Buy to Underperform, stating that sales of those famous UGGs, which accounted for 90% of the company's third quarter revenue, have been disappointing so far this year. The analyst blamed higher prices and unseasonably warm weather for the poor sales, based on numerous channel checks. The price target on the stock was cut from $130 to $72. Shares fell nearly 10% on the downgrade, and are down 17% in the past two weeks.
Sears Holding (SHLD): I've been in a couple of Sears' stores so far this year, and I've seen a mixed picture. One day, I couldn't find a line with less than fifteen people in it, and two days later, walked right up to the register. Shares have taken a beating recently as analysts have really cut back their earnings estimates for the full year and next. In the past month alone, this year's numbers have dropped from a loss of $1.79 to a loss of $2.34. Next year's fiscal loss has been taken down from $1.04 to $1.86 over that same time. This stock was in the low $80s at the start of November, and after Friday's drop, stands at just $46. This has always been one of the most difficult stocks to short, so if you want to take that stance, use put options. Just remember, this stock has taken a beating lately, so even the slightest positive news could lead to a huge bounce back.
Research in Motion (RIMM): Do you know anyone that is getting a Blackberry or a Playbook for Christmas? I don't. Apparently, the company doesn't think many are either, which is why it just cut its fourth quarter revenue and earnings guidance when it reported earnings on Thursday. RIMM shares have been one of this year's worst and most disappointing, with many calling their due of CEO's the worst of 2011. Friday's 11% drop puts the stock at an 8-year low. As shares continue to decline, there will be more chatter about someone trying to pick up the pieces and buy the company out, but who knows what any of RIM's stuff is worth. RIM boasted in its earnings report a subscriber base of nearly 75 million, but its sales and earnings are falling year over year. This stock could be in the single digits soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.