This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Retail Bubble Stocks are Deflating

NEW YORK (TheStreet) -- One of my major themes this fall for retail stocks is that it is highly unusual for consumer staples, consumer discretionary and retail-wholesale companies to be plays on technical momentum, but that was a story in 2012. I have been profiling a dozen retail bubble stocks, and after setting new all time highs or multi-year highs this year, these stocks have been deflating into year end.

On Wednesday, I wrote Consumer Staples Stocks Are Holiday Laggards with that sector 14.5% overvalued according to www.ValuEngine.com. Of the dozen retail bubble stocks I have been covering, two are additional consumer staples stocks included in today's post.

On Nov. 29 I wrote Retail Bubble Stocks Play On Earnings Momentum . This story was an update to my original post on Oct. 17, Analyzing the Retail Stock Bubble. One retail bubble stock is in the consumer discretionary sector which is 2.9% overvalued. Nine of the dozen are in the retail-wholesale sector which is 12.5% overvalued. Five of these are in the retail-discount and variety industry which is 10.9% overvalued.

Among the dozen bubble stocks, six are undervalued and six are overvalued. One has a strong buy rating, nine have buy ratings, and two have hold ratings. Only one has declined slightly over the last 12 months and eight had double-digit gains between 16.1% and 67.7% over the last 12 months. All are projected to be higher over the next 12 months by 2.9% to 14.0% thus lagging the performance of the past 12 months. Six have reasonable trailing 12 months price-to-earnings ratios, and six have elevated P/E.

Chart Courtesy of Thomson/Reuters

Nine of the 12 retail bubble stocks are components of the iShares Dow Jones US Consumer Services sector index fund (IYC). IYC ($85.88) set an all-time high at $89.08 on Dec. 18, and closed Wednesday below its 50-day simple moving average at $86.11, which indicates risk to the 200-day SMA at $82.94. The weekly chart (not shown) shifts to neutral from positive on a close this week below the five-week modified moving average at $86.25. My annual value level is $78.65 with monthly and weekly pivots at $86.72 and $86 93 and quarterly risky level at $90.39.

1 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • 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 Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,051.73 -48.45 -0.28%
S&P 500 1,973.63 -4.59 -0.23%
NASDAQ 4,424.7040 -7.4420 -0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs