Retail Poses An Opportunity

By Kevi n Grewal

Most recent data indicates that U.S. retail sales rose 3.6% from November 1 through December 24 as many loosened the grip on their wallets and spent a couple of extra dollars during the holiday season.

To add to retail’s appeal, the International Council of Shopping Centers expects final holiday sales numbers to increase by 1% from last year and sales numbers for the month of December to jump 2%.  The holiday season, in conjunction with a boost in consumer confidence, increases in disposable income and the loosening of credit markets are all positive forces that should support a favorable trend in the sector.

In fact, a survey conducted by Change Wave Research indicated that 25% of consumers are expecting to spend more money this holiday season than last.  This expected boost in revenues combined with the lean inventory and cost cutting measures implemented by many merchants is likely to add to retailer’s bottom line. 

Of all retailers, those that specialize in electronics and on-line shopping are expected to outperform all their counterparts.  Electronics seem to always be a hot ticket during gift giving times and the inclimate weather combined with convenience enabled many to utilize online shopping to finish last minute holiday shopping.

With this in mind, some retailers to consider are the following:

  • Amazon (AMZN), up 181% from a January low of $48.44 to close at $135.99 on Wednesday.
  • Best Buy (BBY), up 63% from a March low of $24.71 to close at $40.31 on Wednesday.
  • Retail HOLDRs (RTH), which is up 55% from its March low of $61.26 to close at $94.93 on Wednesday.  RTH enables one to gain exposure to both Amazon and Best Buy.

When investing in these equities it is important to consider the inherent risks involved.  To help mitigate these risks, the use of an exit strategy is important.  According to data at, an upward trend in the previously mentioned equites could come to an end at the following price points: AMZN at $128.00; BBY at $39.28; RTH at $91.69.  These price points change on a daily basis as markets fluctuate and updated data can be found at

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