Retail Becomes an Attractive Buy
This exclusive investment insight comes from Jack Haddad, MD, MBA, who is a orthopedic surgeon at the UCSF Medical Center and a hedge fund manager.
“The financial and retail sectors have been hammered in the past 24 weeks, and a lot of names are beginning to look very attractive. Companies such as Macy’s (M), Kohl’s (KSS) and Home Depot (HD) have seen their stocks fall more than 30% from highs reached earlier this year, and now trade at levels last seen in 2005. A number of valuation metrics are signaling that retail shares are attractive. Multi-line retailers in the S&P 1500 sport a price-to-earnings ratio of 0.9. After the dot-com bubble burst in 2000, retailers sold off until their multiples were 0.7 times that of the broader index. Typically, they have peaked when multiples reach 1.2 times that of the S&P 1500. So, it’s time to buy retailers… They should generate close to 30% a year from today’s levels.
I like Macy’s for several reasons; first, it’s digesting the huge purchase of May Department Stores from 2005. Second, it is undergoing a major operation change which should boost its cash flow. The stock currently fetches 28.50. Just several months ago, KKR wanted it for 43/share.”
Jack is a long time friend and look to see more exclusive insight from him here on the site in the future.
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It’s funny, I was in Chicago while they picketed and protested the name changeover from Marshall Fields to Macys. Some people are crazy!
Crazy shoppers I’d say