Insiders made noteworthy buys (see definition below) in three retail sector stocks this past week (June 11th to 15th, 2012), and sold five others. These, along with insider buys and sells last week in other sectors and groups (discussed in a prior article on the consumer sector) were selected based on a review of over 1,300 separate SEC Form 4 (insider trading) filings last week, as part of our daily and weekly coverage of insider trades.
The filings are noteworthy based on the dollar amount sold, the number of insiders buying or selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock (for more info on how to interpret insider trades, please refer to our instablog discussion on insider trading):
Movado Group Inc. (MOV): MOV is a designer, manufacturer and distributor of fine watches, sold under the Movado, Concord, HUGO BOSS, Tommy Hilfiger, and other brands, and it also operates retail outlet stores in the U.S. On Thursday, COO Richard Cote filed SEC Form 4 indicating that he purchased 13,903 shares for $0.35 million, ending with 0.60 million shares after the purchase. This is noteworthy in that it is the only insider purchase at MOV at least in the past two years.
MOV shares are currently consolidating near their all-time highs, after rising over five-fold from the depths of the 2008/09 recessions lows, and are up over 60% in the past year. In its latest Q1 (April), reported at the end of May, the company beat analyst revenue and earnings estimates (26 cents v/s 24 cents), and reaffirmed its guidance for FY 2013 (January). Its shares trade at a current 19.1 P/E on a TTM (trailing-twelve-month) basis, and at 1.5 P/B, compared with averages of 22.9 and 1.3 for its peers in the retail jewelry group, while earnings are projected to rise at a 23.8% annual rate from $1.07 in 2012 to $1.64 in 2014. Also, the company stock has a 0.8% dividend yield, unusual among its peers in the consumer and retail space.
MOV shares, while cheap, have at least a significant perceived risk profile in terms of the difficult economic backdrop in Europe, that accounts for about one-fifth of its sales; the U.S. market accounts for about 60% of its sales. However, gains in the rest of the world (ex-U.S. and ex-Europe), especially in Asia and Middle East, could make up for any gap in Europe. We would look to accumulate shares on any retreat into the low-$20s, and would take advantage of any possible weakness in the share price due to bad economic news out of Europe.
In addition to MOV, insiders also reported noteworthy buys this past week in two other retail sector stocks, the first of which listed below has also been surging recently:
- The Fresh Market Inc. (TFM), that operates a chain of over 110 small-format grocery stores, offering primarily perishable food products in the southeast, Midwest, and mid-Atlantic U.S., in which Director Michael Tucci filed SEC Form 4 indicating that he purchased 1,329 shares for $67,327, in comparison to only an additional 2,875 shares purchased by insiders in the past two years; and
- McDonald's Corp. (MCD), that is the world's most well known and among the largest fast food retailers, with over 32,000 company-owned and franchised restaurants in 117 countries, in which Director Cary McMillan filed SEC Form 4 indicating that he purchased 650 shares for $56,894, the only insider purchase at least in the past two years.
On top of these, noteworthy insider sells this past week in the retail sector included:
- a $13.1 million sale by eight insiders at Dollar General Corp. (DG), that is a discount retailer of general merchandise items in the U.S., including highly consumable, seasonal, home products and basic clothing categories;
- an $11.8 million sale by CFO Gregg Bodnar at Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), that operates a chain of over 460 beauty stores that offer hair-care, cosmetics, and other products, as well as salon services;
- a $4.4 million sale by three insiders at Starbucks Corp. (SBUX), that operates over 17,000 coffee shops worldwide, including over 11,000 stores in the U.S.;
- a $3.0 million sale by two insiders at major discount chain retail store operator Target Corp. (TGT); and
- a $1.4 million sale by Director James Sinegal at Costco Wholesale Corp. (COST), that operates 582 wholesale membership warehouses in the U.S., Puerto Rico, Canada, the U.K., Korea, Taiwan and Japan.
Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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