If you need confident betting in retail, you should follow Wal-Mart Stores, Inc. (NYSE / WMT) and Costco Wholesale Corporation (NASDAQ / COST).
Costco gave good results on Wednesday, after announcing earnings of $ 312 million, or $ 0.71 per diluted share, exceeding the consensus estimate of $ 0.69 per diluted share, according to Thomson Reuters. Revenue growth was 11% to $ 19.24 billion, above a consensus estimate of $ 18.81 billion. The results are stable and continue to show steady growth, but for additional growth you need to look at smaller companies.
For example, Costco has a market capitalization of $ 29.88 billion and is estimated to report sales growth of 8.1% and 7.7% in 2011 and 2012 respectively.
However, look at the small capital of PriceSmart, Inc. (NASDAQ / PSMT), an operator of warehousing clubs in Central America and the Caribbean. PriceSmart reported a sharp 15.8% increase in sales at the same store in November and a 21% increase in November sales over the same period last year. These are strong figures, and consider PriceSmart’s comparative sales growth of 14.8% and 11.8% for 2011 and 2012 fing, respectively.
Retail is on the mend. Consumers are buying again. According to Retail Metrics, sales data from the next 30 retail chains rose 5.8% in November, the 14th consecutive increase and well above the 3.5% estimate.
Black Friday and Cyber Monday were great.
Impressive demand for luxury items, including the strong results of Tiffany & Co. (NYSE / TIF) and high demand for expensive cars.
The key, as I said, is a strong holiday sales season that could lead to a New Year’s Santa Claus rally. Sales during the holiday season also look encouraging, given the stronger-than-expected consumer confidence index for November. The indicator of confidence is critical, as it indicates a positive mood of consumers.
It seems that a reversal could have taken place in retail. The main thing – to look for sales growth in the same store from retailers who sell non-essential goods. An increase here may mean that consumers are spending on goods and services that are not necessary. These include electronics, appliances, furniture, cars and other valuables.
My favorites in retail space are still discounters and large stores. Large stores now sell a wide range of electronics and replenish their product line. This will give consumers a single place to shop.