Act Two of This Week's Retail Earnings

NEW YORK (TheStreet) -- Today I profile seven more stocks in the retail sector: five retail-wholesale stocks, one from the consumer discretionary sector and one from the consumer staples sector. Five of these stocks are rated buy and two are rated hold.

We began the week with a "key reversal" day on the Dow Jones Industrial Average. After setting a new multi-year high at 14,081.58, the Dow plunged to 13,784.17, well below Friday's low at 13,880.62. With a new multi-year high we are on watch for a weekly "key reversal" with a close on Friday below last week's low at 13,834.40.

Back in October 2007 the Dow Industrials had weekly closes above 14,000 only twice on Oct. 6, 2007, and Oct. 13, 2007. The following week the Dow closed at 13,522, so a quick and fierce market reversal can happen.

With Monday's stock market decline and with a decline in the U.S. Treasury bond yield to 3.067%, the percentage of overvalued stocks fell to 56.6% from 65.8% on Feb 21 when www.ValuEngine.com issued a valuation warning.

ValuEngine still shows that 15 of 16 sectors are overvalued, but sectors overvalued by more than 10% fell to 7 from 10 on Monday. Today's focus sectors are overvalued: consumer discretionary by 5.4%, consumer staples by 21.9% and retail-wholesale by 8.4%. The consumer staples sector is the most overvalued.

The retailers profiled today are not the best performers within their sectors as six of seven are trading below their 200-day simple moving averages (SMA).

Reading the Table

OV/UN Valued -- The 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 elack 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 is the 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: is the price at which to enter a GTC Limit Order to sell on strength.

Here's my "buy and trade" strategies for these retail-related stocks:

Reporting after the close on Wednesday:

JC Penney ( HD) ($21.51) is expected to report a loss of 16 cents per share. The stock has a hold rating and set a multi-year low at $15.69 on Nov. 16 with the 200-day SMA at $22.71. JC Penney is 25.6% overvalued and declined 48.2% over the past 12 months. The weekly chart profile remains positive with a close this week above the five-week modified moving average (MMA) at $20.44. My semiannual value level is $17.38 with a weekly pivot at $21.25 and a quarterly risky level at $24.32.

PetsMart ( PETM) ($62.61) is expected to earn $1.21 per share. The stock has a buy rating and set its multi-year high at $72.75 back on Sept. 10, 2012. PetsMart is 13.5% undervalued, has gained 15.4% over the past 12 months, and has a slightly elevated 12-month trailing EPS at 17.8. The weekly chart profile stays negative on a close this week below the five-week MMA at $65.78. My annual value level is $46.91 with a semiannual pivot at $62.22 and weekly risky level at $65.87.

Monster Beverages ( MNST) ($49.64) is expected to earn 41 cents per share. This consumer staples stock has a buy rating and set a multi-year low high at $39.99 on Nov. 8, 2012. Monster is 12.9% undervalued, is down 12% over the past 12 months and has an elevated 12-month trailing EPS at 26.0. The weekly chart profile stays shifts to negative from neutral on a close this week below the five-week MMA at $49.61. My monthly value level is $37.61 with a weekly pivot at $46.85 and semiannual risky level at $53.96.

Reporting before the open on Thursday:

Best Buy ( BBY) ($17) is expected to earn $1.56 per share. The stock has a buy rating and set a multi-year low at $11.20 on Dec. 27, 2012. Best Buy is 19.2% undervalued and is down 29.3% over the past 12 months with a single-digit 12-month trailing P/E ratio at 5.2. The weekly chart profile stays positive on a close this week above its five-week MMA at $15.72. My monthly value level is $13.88 with a semiannual pivot at $17.47 and weekly risky level at $19.66.

Kohl's ( KSS) ($45.51) is expected to earn $1.63 per share. The stock has a buy rating and recently failed at its 200-day SMA at 48.18. Kohl's is 10.9% undervalued, is down 5.4% over the past 12 months and has a reasonable 12-month trailing P/E ratio at 11.0. The weekly chart profile stays positive given a close this week above the five-week MMA at $45.55. My quarterly value level is $42.15 with a weekly pivot at $47.51 and an annual risky level at $49.19.

Reporting after the close on Thursday:

Deckers Outdoor ( DECK) ($40.70) is expected to earn $2.58 per share. This consumer discretionary stock has a hold rating and set a multi-year low at $28.53 on Oct. 31, 2012. Deckers Outdoor is 13.3% undervalued, has declined 47.6% over the past 12 months and has a reasonable 12-month trailing P/E ratio at 12.0. The weekly chart profile shifts to negative with a close this week below the five-week MMA at $40.33. My monthly value level is $32.25 with a weekly pivot at $42.75 and quarterly risky level at $46.32.

Gap ( GPS) ($31.22) is expected to earn 71 cents per share. The stock has a buy rating and set a multi-year high at $37.85 back on Oct. 5, 2012. The Gap is 1.6% undervalued, has gained 40.7% over the past 12 months and has a reasonable 12-month trailing P/E ratio at 13.7. The weekly chart profile shifts to negative with a close this week below the five-week MMA at $32.28. My quarterly value level is $28.28 with a semiannual pivot at $32.17 and weekly risky level at $34.53.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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