Because of the weather this year many retailers like Walmart
(WMT) who’s price got hammered today have missed their earnings estimates and
have caused the market to be extremely volatile. If there’s one reason to pay attention to
climate change it’s because of the effects on the market. With heavier storms called for in the future
there will be fewer opportunities for consumers to make it out to brick and
mortar stores especially during the holidays.
One way to play this market situation is to invest in online retailers
and delivery services. Amazon is of
course the largest online retailer but there are other companies like Ebay (EBAY). Some of the delivery services to pay
attention to are of course Fed Ex (FDX) and UPS.
The key is to look for bargains. Look at companies who have an active and
extensive online offering. This is a
good indication that they are making money from their online store. You of course have to do due diligence and
see what the PEG and EPS ratios are and pay attention to the trend and the price
overtime. I would also look at the
management and maybe even Google some of the management team to see how they
have fared over the years. If a company
is well managed, has a strong PEG ratio, and an active online presence then
consider it a bargain.
You can also do the contrarian play and short big box retail
stores like Walmart (WMT) and Target (TGT) but be careful. If the companies you are looking at are
making the necessary changes to increase their online sales and using
alternative delivery services, then it’s not a good bet to go against
them.
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