Target, Dollar Tree and Buckle Up for Earnings Thursday
GameStop, Abercrombie round out our retail-wholesale stocks earnings preview.By Richard Suttmeier, Expert Contributor
NEW YORK (TheStreet (Symbol : TST)) -- Today's buy-and-trade earnings previews focus on five buy rated companies in the retail-wholesale sector that report quarterly results premarket Thursday including big box retailer Target (Symbol : TGT), casual apparel seller Buckle and discounter Dollar Tree (Symbol : DLTR), On Tuesday I wrote Holiday Sales, Housing Recovery Are Key to Recovery and this theme continues as retail earnings becomes a stock market focus. If earnings reports for retailers are not up to par and if housing data weaken, the stock market becomes vulnerable. Such would be further proof that Federal Reserve policy is failing to help Main Street, USA.
The retail-wholesale sector is 28.4% overvalued with an overweight rating. Of the 345 stocks 80.0% in this sector have buy or strong buy ratings. All five stocks in today's table have buy ratings and all are overvalued by 10.4% to 56.9%. One stock is down 19.7% over the last 12 months while two have solid gains of 46.6% and 105.2% over the 12 months. Two are below their 200-day simple moving averages with three above which reflects the risk of reversion to the mean.
Reading the Table
OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: Price at which to enter a GTC limit order to sell on strength.
Abercrombie ($35.18) is expected to report EPS of 44 cents a share and has been trading below its 200-day SMA since Aug. 21 and traded to a 52-week low at $32.41 on Nov. 7. The buy rated retailer of family-oriented apparel has a weekly value level at $32.23 with its 50-day SMA at $35.75 and a monthly risky level at $39.28.
Buckle ($52.52) is expected to report EPS of 90 cents a share. The stock set a multi-year high at $57.68 on Aug. 5 then broke below its 200-day SMA on Oct. 10 to a second half 2013 low at $46.26 on Oct. 11. The buy rated retailer of mid-priced apparel for young men and women moved back above its 200-day at $50.84 on Nov. 8. My semiannual value level is $50.74 with a semiannual risky level at $56.19.
Dollar Tree (Symbol : DLTR)($59.31) is expected to report EPS of 60 cents a share. The stock set a multi-year high at $60.19 on Oct. 22 and has been up against this high on Monday. The buy rated discount variety chain has a semiannual value level at $52.56 with a semiannual pivot at $60.61 and quarterly risky level at $61.33.
GameStop (Symbol : GME)($53.19) is expected to report EPS of 58 cents a share. The stock set a multi-year high at $57.74 on Nov. 14 and then fell to the cusp of its 50-day SMA at $52.88 on Nov. 19. The buy rated retailer of video games and entertainment software has a weekly pivot at $58.18 and monthly risky level at $63.08.
Target (Symbol : TGT)
($66.63) set a multi-year high at $73.50 on July 24 then broke below its 200-day SMA on Aug. 21 trading to a second half 2013 low at $62.03 on Oct. 8. The buy rated big box retailer and grocery chain is above its 50-day SMA at $64.49 with the 200-day at $67.42. My annual value level is $65.45 with a monthly risky level at $71.59.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's (Symbol : TST) regular news coverage.
Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.
Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.
Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.
Click here for details on Suttmeier's "Buy and Trade" investment strategy.
Richard Suttmeier can be reached at RSuttmeier@Gmail.com
© 1996-2013 TheStreet.com, Inc. All rights reserved.