The Best Retail Stock to Own Right Now

Ed Ponsi

On Friday morning, the U.S. Census Bureau reported that retail sales jumped in September. Retail sales climbed 1.9% for the month, well above analysts' expectations of a 0.7% increase. 

Remember when retail stocks had no future? To be fair, retail was one of the worst sectors to own over the past six years. Here's a comparison chart, starting in January of 2015, comparing the SPDR S&P Retail ETF (XRT), in red, vs. the S&P 500 (green) and the Nasdaq 100 (blue). 

comparison monthly
Monthly comparison chart via TradeStation

Over that nearly 6-year stretch, the major indices have outperformed retail stocks by a wide margin. That's the long term view. 

Now, look at the relative performance of these instruments over the past six months:

comparison daily
Daily comparison chart via TradeStation

Clearly, retail is beating the pants off the major indices. Obviously, the success of Amazon (AMZN) has helped retail run up the score. Which retailer has the best chart right now?

Walmart chart via TradeStation

I'm going with Wal-Mart (WMT). After blasting out of a bullish cup and handle pattern in August, the stock has formed yet another cup and handle. Wal-Mart is trading above its 50-day (blue) and 200-day (red) moving averages, and its Chalkin Money Flow index just flashed a buy signal on Thursday (shaded yellow). 

Based on the above chart, my projection for Wal-Mart is $160

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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here