There are two top performing companies in the retail space now, W and AMZN. Everything else has been ripped to shreds. The death of the shopping mall is not being promoted enough, leaving mallfags with a false sense of security to believe that this ‘dip’ will bottom out and the good times will return again.
(ADJUSTS MICROPHONE)
Over the past 3 years, the median return for the department stores is DOWN 55%.
Over the past 3 years, Amazon is UP 215%.
For the past 12 months, all of the department stores, combined, posted revenues of $128.5b, with free cash flow of $1.45b. All of the apparel stores, aka the shit in the malls, posted revenues of $107b, with free cash flow of $6.4b. More than $4b of the free cash flow was produced by three companies: JWN, LB and ROST.
Amazon posted $113b, with free cash flow of $6.7b.
Quarterly revenue growth for the department store sector is down 5% over the past 12 month, whilst Amazon is higher by nearly 30%.
Now extrapolate these numbers over the next five years and tell me what the retail landscape will look like. Moreover, what will happen to all of the REITs will mall properties, dependent on dying retailers for their income?
There’s a reason why I’m mentioning this, as part of a greater overall thesis that I intend to talk about over the not-so-distant future. There is nothing wrong with using technicals to buy/sell stocks. However, ignoring the fundamentals is a sure-fire way of being caught off guard by an earnings warning, which could surprise rape you because you weren’t paying attention.
Quit being lazy. Screen out the bullshit. I have empirical evidence showing that buying companies with good fundamentals shatters the performance of those lacking. More on that later next week.
The post MALLFAGS: Get in Here and Defend Your Thesis appeared first on Trading with The Fly.
May 14, 2017 at 03:04AM
from Dr. Fly
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