On December 13, I wrote an article about several big retail mall stocks that appeared to be very undervalued. I advised readers to buy on the dips for a nice gain in the near future:
The major news is that the retail companies are not responding. It is the Golden Quarter. Everyone is at the mall buying for the holidays. But the big retail stocks opened down today, and have remained down compared to the S&P. So if you are seriously considering a retail stock to invest in, consider this artificial dip as a buying opportunity. I also discuss these same companies in 5 Popular Mall Stocks and Their Short Positions. I will add one note of caution. I used Talbots as a stock in these articles because I have been studying them for quite awhile and have written a lot of articles about the company. However due to the possible takeover by a private equity company, I would use extreme caution in considering the stock.
Let's take a look at those same companies three months later and see what has happened to their share price.
Macy's (NYSE:M) closed at $30.71 on 12/13/11. As of Monday it closed at $39.59 up $8.88 or 29%. Since it has gone up this much and is nearing its 52 week high, I would hold it for now. P/E is 13.59 which is very good, so if you are looking to get into this stock I would still buy on the dips.
Dillard's (NYSE:DDS) closed at $46.20 on 12/13/11. It closed Monday at $63.00 up $16.80 or 36%. Wow-- what gains Dillards has had. As with Macy's, the stock is almost at its 52 week high. There will be some profit taking at this price which might provide a nice dip. But the P/E is only 7.37, which makes it a strong buy even at this price. Proceed with caution.
DDS vs. S&P 500
Nordstrom (NYSE:JWN) closed at $46.98 on 12/13/11. On Monday it closed at $53.67 up $6.69 or 14%. Again the stock is approaching the 52 week high. However it also has a very healthy P/E of 17.22. Considering the upturn in the economy, the price should remain strong. But if it were to drop a little it would be a good buy.
JWN vs. S&P 500
Ann Taylor (NYSE:ANN) closed at $23.91 on 12/13/11. As of Monday it closed at $27.85 up $3.94 or 16%. The 52 week high is $32.49, so I think Ann still has more room to grow. The P/E ratio is 16.71 which makes it very attractive. I think this is a good price to buy. There probably won't be any dips in the near future.
ANN vs. S&P 500
Talbots (NYSE:TLB) closed at $2.72 on 12/13/11. It closed at $3.12 on Monday, up $0.40 or 15%. This poor stock has been through so much. The company has lost so much money and with a negative P/E it is mainly a very long shot right now. I would stay away for the time being.
All of these retail stocks, including Talbots-- which I had warned about-- have done very well. If you had invested $10,000 into any one of these companies, you would be up for the year. The largest increase was Dillard's at 36%. You would have made $3600, or $1200 a month, which is not bad. And except for Talbots, all of the companies seem very strong right now. Don't expect the big gains that the last three months brought, though. As I said back then, all of the companies were very undervalued. However, if you are a speculator, I wrote an article about how Talbots could pay off for gamblers.
Disclosure: I have no positions in any stocks mentioned. I might buy Dillards stock in the next 72 hours.