At this time of year, retail stock-watching is as customary as turkey and cranberry sauce.
But this year, we’re seeing an interesting new phenomenon unfold among some familiar players.
The stock market is diverging, split between the top-tier “Haves” and the struggling, shrinking “Have Nots.”
This shift means big profits for investors looking at the companies I’m about to talk about.
But it also means classic retail stocks are facing nearly insurmountable headwinds this year. And it would be a (costly) mistake to expect much good news for them in the upcoming 2015 holiday shopping season.
In fact, the “Have Nots” are going to find that the “Haves” have come in and taken it all…
Who’s Losing This Season
Out in the cold are the “Have Nots,” established brick and mortar retailers like Macy’s Inc. (NYSE: M), Nordstrom’s Inc. (NYSE: JWN), and JC Penney Co. Inc. (NYSE: JCP).
Over the past few weeks, we’ve seen some terrible earnings reporting from high-end retailer Nordstrom. And JC Penney’s troubles are as well-documented as they are never-ending.
Venerable old Macy’s is looking to close around 40 locations before the first half of 2016, as it prepares to surrender its position in the clothing segment to Amazon over the next 18 months.
Even bigger brick-and-mortar retailers, like Wal-Mart Stores Inc. (NYSE: WMT), which have deep pockets and something of an online presence, are finding themselves under threat from Amazon.
For these retailers, the trouble has less to do with a struggling economy and more to do with a fundamental change in the way people shop. They clearly didn’t anticipate how deeply consumers would embrace technology and shopping from nearly anywhere.
And there’s no clear path back to health and prosperity for these old retailers, who may find that they’re “Have Nones” before too much longer.
And that brings me to this season’s winners…
Tech Is Running Away with Retail’s Money
The “Haves” are the New Economy companies – some of them huge players in retail – like Amazon.com Inc. (Nasdaq: AMZN), Alphabet Inc. (Nasdaq: GOOG, GOOGL), Facebook Inc. (Nasdaq: FB), and Netflix Inc. (Nasdaq: NFLX).
The undisputed king of the “Haves” is of course, Apple Inc. (Nasdaq: AAPL), which has a masterful balance of old-school Apple Store retail outlets and cutting-edge iEverything devices.
The stock was knocked off highs recently on word of a Credit Suisse “channel check” that suggested weak supply chain orders for Apple’s big iPhone 6s. But it’s making up ground, and the recent addition of Apple to Goldman Sachs’ “Conviction Buy” list is nothing but good for its near-term price. In fact, my Stealth Profits Trader readers just made up to 203% on a recent Apple trade thanks in part to these developments.
As I said, Amazon is another tech-centric company that’s looking better and better in comparison to its traditional counterparts, chiefly Wal-Mart. This summer, of course, Amazon became more valuable by market cap than the 53-year-old Bentonville mega-chain. Wal-Mart is still about 20 times bigger, but Amazon is crushing it in online sales, $89 billion to $12.2 billion in 2014.
With Amazon’s daring (and likely successful) experiments in same-day and even one-hour delivery and Apple’s unbeatable market penetration, these are companies that seem to be wired into the most popular social trends and key demographic changes almost before they happen, and they’re crushing traditional “holiday favorites” because of it.
Unless JC Penney starts making the world’s most popular smartphone or Nordstrom starts delivering those cookies to customers inside 20 minutes, there’s virtually no chance of traditional retail’s return to dominance.
Grab these shares and make sure you’re making money on the right side of the trend.
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