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
TheStreet Open House

These 7 Retail Stocks Might Give More Bang For Your Buck This Holiday Season

Stocks in this article: ANNAZOCONNGPSLADSMRTTSCO

James Dennin, Kapitall: China's Cyber Monday makes ours look like just another weekday, but should US retail stocks worry?

It's no secret that Americans like their sales. Ever since the invention of Black Friday – a day when the inside of American retailers take on the look of a war zone - sales have grown steadily, perhaps to their breaking point

[Read more on Retail from Kapitall: Could 3D Printing Actually Threaten Retailers like Walmart?]

Today China is expected to blow that out of the water. After the Chinese online retailer Alibaba began offering its inaugural November sales (an attempt to replicate America's shopping flurry around the holidays), China's version of Cyber Monday has ascended to overtake the sales of America's two biggest shopping days combined

And most sales are focused on this one, giant, online retailer. 

It's important to mention that a lot of the actual products purchased on Alibaba's websites still come from American companies. And since anyone who's been to a Duane Reade (WAG) in the last week or two knows that the holiday season is imminent – we decided to start compiling lists of promising retail stocks who might be set for a Christmas surge.

Investing ideas

Beginning with a universe of about 100 stocks that are specialty retailers, we wanted to look for signs of growing profitability before the holiday shopping season. One of the standard measures of profitability is the ever-popular metric, return on equity (ROE). However there's a big problem with ROE, because a company can boost the statistic by borrowing money.

To get a more holistic measure of how good a company is at generating profits – the Dupont Corporation (DD) came up with a more refined statistic, the Dupont Breakdown:

ROE = Net Profit Margin  x  Asset Efficiency  x  Financial Leverage

By taking into account a company's profits, how well it's using assets on hand, and how much it is borrowing; investors can get a more reliable indicator of whether a company is becoming more profitable. A company with an encouraging Dupont breakdown is typically seen as making better use of its resources – which is a potential indicator that the stock may be ready to grow. 

1 of 3

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 16,712.76 +34.86 0.21%
S&P 500 1,952.48 +1.66 0.09%
NASDAQ 4,461.1930 +8.4010 0.19%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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