This Day On The Street
Continue to site
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

You're Better Off Selling Bed, Bath, & Beyond and Buying Lululemon

NEW YORK (TheStreet) -- All successful specialty retailers sooner or later encounter margin pressure from Walmart (WMT), Target (TGT), Macy's (M), J.C. Penney (JCP), and Sears/Kmart (SHLD).

Two specialty retailers recently reported earnings, Lululemon (LULU - Get Report) and Bed Bath & Beyond (BBBY - Get Report). Bed Bath & Beyond reported Wednesday after the close. Both companies disappointed investors and both experienced margin pressure, but only one, Lululemon, is a buy because, among other reasons, it is a potential takeover target.

BBBY Chart

Here's why it's time to cut Bed Bath & Beyond loose and use the capital to buy Lululemon (or another appropriate stock) for your portfolio. I'll explain why using Whole Foods Market (WFM), another retailer, albeit in food, as a road map investors can use to anticipate the trajectory of Bed Bath & Beyond's stock.

At first glance, the similarities between Whole Foods and Bed Bath & Beyond may not be readily apparent because two entirely different products are sold, and the only commonality is food bought at Whole Foods can be prepared using Bed Bath & Beyond kitchenware.

However, if you look at the two companies through the eyes of Sears, Walmart, and Target, the only difference between the products sold at Whole Foods and Bed Bath & Beyond is the SKU number. Sears/Kmart, Walmart and Target sell everything from avocados to zero-turn lawnmowers. The big three retailers are in a constant state of inquiry to find products -- almost any products -- with higher margins to replace lower-margin items.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BBBY $46.07 0.00%
LULU $65.54 0.00%
AAPL $95.18 0.00%
FB $117.43 0.00%
GOOG $692.36 0.00%


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%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs