2007 Will Be Huge for Retail
By Graham Summers
December 22, 2006
I believe 2007 will be a huge year for retail.
These past 12 months were, by all counts, blockbuster for the retail sector. According to Thomson Financial, same-store retail sales grew at a monthly average of 3.7% year over year. When you take Wal-Mart out of the mix, it’s 4.7%.
Thomson forecasts 2007 will be no different, anticipating same-store sales growth of 3%-3.5%. Corporate insiders are certainly banking on it.
In 2006, there were 63 retail companies with insider buying. Altogether, corporate insiders at retail companies bought $137 million worth of stock in 2006. Practically any retailer you can name had plenty of insider buying. Some of the better known are:
| Federated Department Stores |
Circuit City |
| Nordstrom |
Radioshack |
| Limited Brands |
Walgreens |
| Kohl’s |
Williams Sonoma |
| Saks |
|
Now, I love seeing insiders buy their own stock. But I love seeing the world’s best investors move into a particular sector even more. And the legends are investing in retail by the truckload.
See for yourself:
Legend |
Retailers in Portfolio |
Holdings |
| |
|
|
Warren Buffett |
Wal-Mart |
$855 million |
|
Nike |
$400 million |
|
Costco |
$260 million |
|
|
|
George Soros |
Target |
$39 million |
|
JC Penney |
$21 million |
|
Kohl’s |
$20 million |
|
GameStop |
$20 million |
|
|
|
Joel Greenblatt |
Wal-Mart |
$19 million |
| |
Aeropostale |
$18 million |
| |
AutoZone |
$2.5 million |
You probably know the world’s richest professional investor, Warren Buffett. Well, George Soros is one of the world’s richest speculators. Joel Greenblatt has made his investors a near-unbelievable annual average of 40% for 20 years. If you haven’t read his latest book, I encourage you to add it to your reading list for 2007.
Despite all the talk of a slowing economy brought about by a housing crash, neither the guys running the companies, nor the ones who have made fortunes investing in publicly traded companies seem to believe it.
And as the last 15 years have shown us, few things are as consistent as Joe America’s determination to spend money he shouldn’t on things he doesn’t need.
If you haven’t looked at retail stocks already, now is the time. You won’t hear about the sector from Wall Street until the big gains have already been made.
Good trading,
Graham
Editor’s note: Our offices will be closed from Christmas through New Year’s Day. We think it’s important for our staff to spend time with their families during the holidays. I hope you’ll understand. Look in your inbox on January 2 and you’ll find us hard at work again. Happy Holidays.
