Christmas In July

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Includes: AMZN, BABA, CCL, CVS, DAL, GOOGL, MZ, NCLH, NTDOY, RCL, WMT, ZNGA
by: Dana Blankenhorn

Summary

Good times are rolling with stocks at record highs.

Retailers are following Amazon.com in creating a Christmas in July.

If you buy, look carefully at new opportunities. It may be a better time to sell.

Need a little Christmas? Right this very minute? Candles in the window, and carols at the spinet?

We got you covered.

Amazon's Prime Day (NASDAQ:AMZN), built to copy Alibaba's (NYSE:BABA) Singles' Day events, is happening this week, and competitors are racing to cover it. Some can afford to. Wal-Mart (NYSE:WMT) is actually up more on a percentage basis (20.6%) than Amazon is (11.5%) so far this year.

Investors of all shapes and sizes are getting gifts. Stocks have to go up because interest rates are negative around the world. Even tiny gains (Wal-Mart sales are up only 1% year over year) look great in a world where sovereign debt actually costs money to own.

A U.S. unemployment rate under 5% means there is competition for labor, even low-skilled labor, and these raises have a very high "multiple," flowing right back into the economy in the form of spending. It's a virtuous cycle. Negative interest creates demand for stocks, companies hire, raises go back into the economy, stocks go up, and other countries finally start stimulating their economies to catch up, creating even more opportunity.

This is actually a great opportunity for you to be looking to sell some stocks. Getting out with maximum profit is a lot harder than buying something which then goes up. But what do you sell? If you dump your "garbage," stocks like Delta Air (NYSE:DAL) and CVS (NYSE:CVS), you're leaving just when analysts are pounding the table for them, pointing to low valuations relative to the market. Lighten up on winners like Amazon and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and you're abandoning the biggest opportunities out there.

If you're going to buy now, I would consider opening new positions in "next big thing" story stocks. Here's one thought. Cruise stocks like Royal Caribbean (NYSE:RCL), Norwegian (NASDAQ:NCLH) and Carnival (NYSE:CCL) have been dogs this year, but they are moving large parts of their fleets to China, where they're floating very full. This may be a good way to play the growth of Chinese consumerism. Carnival has the lowest Price/Earnings multiple of the group, with six ships in the area, and plans to build a new one there. That would be my pick.

Mobile game makers are going to be pushing aggressively into augmented reality, and while Nintendo (OTCPK:NTDOY) may have gotten ahead of itself and MZ (MZ), formerly Machine Zone, is privately held, long-time dog Zynga (NASDAQ:ZNGA) actually has a hit in CSR Racing, and the new AR trend could give new life to old titles. Besides, it's cheap as chips, a market cap of $2.5 billion covering $762 million in revenue (cheap for a tech company), 78% owned by institutions, and a new management team some say may not be terribly-terrible.

These are ideas for buyers, but as I said, I'm not a buyer right now. I'm a happy holder, and my instincts are to ring the cash register. Good times pass, just as bad times pass, and that's a good thing to remember with stocks at record highs.

Disclosure: I am/we are long AMZN, CVS, DAL, GOOGL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.