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Big Lots, Dollar General, Costco, Remain Buy Rated

NEW YORK ( TheStreet) -- The discount retailers are in the retail-wholesale sector, which is one of the five of 16 sectors that I gave an overweight rating on Tuesday in Cisco Joins List of 11 Buy-Rated Dow Stocks as Fundamentals Deteriorate. On June 3 I wrote, Discount Retailers Track Slow Consumer Spending where I profiled nine buy-rated discount retailers. Today these nine stocks remain buy-rated and seven have traded higher since the end of May.

The headliner this week just as it was three months ago is Dollar General (DG - Get Report) which reported quarterly earnings pre-market on Wednesday. This discounter beat EPS estimates by 3 cents earning 77 cents a share. The stock traded to a new multi-year high at $57.42 despite a cautious outlook.

Fundamentally, the stock market remains under a ValuEngine valuation warning with 74.6% of all stocks overvalued, and with 38.0% overvalued by 20% or more. We show 15 of 16 sectors overvalued, 13 by double-digit percentages, with four overvalued by more than 20%. The retail-wholesale sector is overvalued by 19.3%.

Seven of the nine discount retailers rose by 1.7% to 14.9% since the end of May with two declining by 2.6% and 8.6%. Eight of nine are overvalued but by 18.8% or less. At the end of May all nine stocks were above their 200-day SMAs and today two are below on the risk of a reversion to the mean.
[Read: <a target="blank" data-add-tracking="true" href=""><em> How GM's Chevrolet Cruze Started an Auto Revolution</em></a>]

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.
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FDO $0.00 0.00%
BIG $46.02 -0.89%
COST $151.46 0.35%
DG $82.95 0.55%
DLTR $80.62 -0.32%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

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