NEW YORK ( TheStreet) -- Retail sales for June were largely disappointing following several months of better than expected results tied to warmer than usual weather. We sold out of Costco (COST) last week - having run 14% from its recent lows we didn't like the risk/reward. But it's a name that continues to be on our radar screen given its quality brand, dominance in the club warehouse market, strong returns and steady recurring revenues which is driven by its membership fee business.
The company disappointed on the same store sales line coming in at the low end of its guide at 3% gain ad 4% consensus. But underlying fundamentals remain strong with core US comps at 3% (and a nice 11% 2 year stacked basis), International comps up 8% (an impressive 17% 2 year stacked) and traffic remained solid at 3% despite the Independence Day shift.
In the meantime, we will stick with our TJX (TJX) position which continues to mail it in with 7% June comps, higher earnings guidance and a strong inventory position. Jim and I debate whether to keep taking gains in this one, but with strong momentum and secular growth in the off priced segment - we will continue to enjoy the ride. Plus at 15x forward estimates the stock trades below its earnings growth rate of 16-18%. As a sidenote, please check out our latest addition in the retail segment Nike (NKE) and why we continue to add to Caremart (CVS) - which is now posted on the site.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV