This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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

Stocks in this article: IYC AMZN COST WMT LOW

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

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

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