Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Retirement Compounders®
  • Free Email Signup

This is your Cue to Start looking at Retail Stocks

September 29, 2017 By Jeremy Jones, CFA

Retail is a competitive business. The barriers to entry tend to be low and far too many publicly traded firms have businesses that aren’t durable enough for conservative long-term investment. Amazon has put the wood to many of these firms. The WSJ reports in the article below that the “Amazon Effect,” (not to be confused with “Bezos Law”) has led to a souring on global retail stocks.

Amazon is a darling of the financial press and in many Wall Street brokerage houses. Amazon has had a real impact on brick and mortar retailers, but the most pronounced effect has been in the stock market. As much as investors love Amazon today, they hate the physical retailing space even more.  I’m not sure there is an industry that is more unloved, forlorn, and out of favor today than brick and mortar retailing.

That’s not an indication that the bottom is in for retailers. There are likely to be many more bankruptcies before we reach that point, but if you are an investor in the out of favor, retail is an industry you are going to want to keep an eye on. Yes, there are many mediocre businesses in the space, but one can see a scenario where a culling of the weak leads to greater profitability for those firms that survive.

Riva Gold and Saabira Chaudhuri write in the WSJ:

Amazon.com Inc.’s AMZN +0.41% expanding reach is prompting investors to dump shares of retailers far from the U.S.

The Seattle-based company is hastening a global move to online shopping that is plunging many overextended retailers into crisis, forcing some to eliminate physical stores, cut prices or even file for bankruptcy.

While the “Amazon effect” has been most pronounced in the U.S., investor concern overseas has been rising.

“Virtually every retailer needs to assume Amazon is coming for them,” said Eddie Perkin, chief equity investment officer at Eaton Vance EV -0.44% Investment Managers. “What companies and investors thought were immune categories have turned out not to be immune.” Mr. Perkin has been avoiding shares of many brick-and-mortar retailers even as their prices have fallen.

The Stoxx Europe 600 retail sector has shed 3.7% so far in 2017, even as the wider European benchmark has gained 6.9%. Retail was Europe’s least popular sector among fund managers surveyed by Bank of America Merrill Lynch in September. Europe had been partly sheltered from Amazon’s impact until recently. In 2015, the Stoxx Europe 600 retail sector had gained 8%, even as the U.S. SPDR S&P Retail ETF fell 9.9%.

Read more here.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Are Retail Stocks at an Inflection Point?
  • Are Investors Too Bullish?
  • As if On Cue, Amazon Cuts Prices at Whole Foods
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. CNBC has ranked Richard C. Young & Co., Ltd. as one of the Top 100 Financial Advisors in the nation (2019-2022) Disclosure. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Money Market Assets Hit Record High: $5.4 Trillion - May 26, 2023
  • The Mania in AI Stocks Has Arrived - May 25, 2023
  • The Wisdom of Sam Zell - May 24, 2023

Search Young Research

Most Popular

  • Letter to the Federal Reserve Chairman from Your Survival Guy
  • What Does That Have to Do with Your Dividend?
  • Is an Investment Property Disaster Looming?
  • “I Came from Nothing,” He Said. “I Mean Nothing.”
  • Private Debt Funds: More Risk than Meets the Eye
  • The Wisdom of Sam Zell
  • How Activists Have Weaponized Corporate Boards
  • Is Japan Rising Once More?
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • When Did You Become Serious about Your Money?

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

The Importance of a Balanced Portfolio

Invest with Peace of Mind and Comfort

What Kind of Life Are You Investing For?

RSS The Latest at Richardcyoung.com

  • Pushing the Envelope Too Far
  • Your Survival Guy in Rome 30-Years A.B. (After Babson)
  • America’s Favorite Wordsmith Needs Tutoring
  • A Three-Week International Research Trip to Paris via Rome
  • BIOTERROR RISK: The Dangers Genetically Modified Insects
  • Why Be Proud?
  • What Does That Have to Do with Your Dividend?
  • Will Biden’s Ukraine Gambit Be America’s Worst Foreign Policy Disaster?
  • Stossel Says DeSantis Is “Smarter and Better than Biden.”
  • What Would They Give Up for “Equity”?

RSS The Latest at Yoursurvivalguy.com

  • Your Survival Guy in Rome 30-Years A.B. (After Babson)
  • Insurers Now Fleeing the Net Zero Insurance Alliance
  • A Three-Week International Research Trip to Paris via Rome
  • Will Biden Repeat Obama with US Debt Downgrade?
  • What Does That Have to Do with Your Dividend?
  • The ESG Cartel
  • Two More States Nearing Passage of Permitless Carry Legislation
  • How Activists Have Weaponized Corporate Boards
  • Letter to the Federal Reserve Chairman from Your Survival Guy
  • Big Blue Blob Cities Get Bad News from Census Report

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2023 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.