NEW YORK (TheStreet) -- When you look at last week's earnings reports from many retail-oriented companies the message is clear that consumers on Main Street have significantly cut back spending. Ulta Salon (ULTA) is not selling the quantities of beauty and salon products that Wall Street expected and the stock lost 25% of its value on its way to the earnings woodshed. Consumers lost their sweet tooth for Krispy Kreme (KKD - Get Report) donuts and its stock got creamed by 21.3%. Express (EXPR - Get Report) reported disappointing sales of their specialty men's and women's apparel and its share price was stripped by 21.1%.
On Dec. 2, I wrote Krispy Kreme, Men's Wearhouse Headline Earnings and four of the eight stocks in this post were sent to the earnings woodshed. Men's Wearhouse (MW) delayed its earnings report to this Wednesday in afterhours trading.
On Wednesday, I wrote Dollar General, Joseph A Bank Headline Earnings and four of the nine stocks in this post were sent to the earnings woodshed.
As I said in a recent post, the U.S. economy has been generating what some economists call dead-end jobs, not career-starting opportunities.
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The Federal Reserve wants a higher inflation rate, while Main Street struggles with a higher cost of living. Family incomes are down. Health care costs are on the rise. Homeowners face higher property taxes as home prices rise with higher home insurance costs. Savers earn zero on their money and these folks never invested in the stock market and never will. Interest rates are significantly higher on consumer credit cards and on small business lines of credit. The bottom line is that Fed policy has failed to help Main Street and recent earnings from retailers support this notion.
All eight woodshed stocks in today's post are in the retail-wholesale sector and their price declines from either last Friday's close or from last Tuesday's are down between 7.1% and 25%. Because of this weakness three of the buy rated stocks were upgraded to strong buy according to www.ValuEngine.com. Three have become undervalued by 7.3% to 15.3%, while one of the four overvalued stocks is overvalued by 116.4%. Two are now down 7.7% and 35.9% over the last 12 months, while five still have gains between 22.1% and 120.4% over the last 12 months. One was already below its 200-day simple moving average, while four broke below their 200-day SMAs on the way to the earnings woodshed. This shows the power of returning to the mean.
Aeropostale (ARO) ($9.00 vs. $10.32 on Nov.29) missed EPS estimates by 4 cents reporting a loss of 29 cents a share in the afterhours on Nov. 4. The hold rated stock fell to $8.42 on Nov. 5 ending the week down 12.8% since Nov.29. The retailer of casual apparel targeted to teenagers is 116.4% overvalued and is now down 35.9% over the last 12 months and has been below its 200-day SMA at $12.22 since August 8. My monthly pivot is $9.88.