July 26, 2021

7 retail stocks you really don’t want in your cart – Marseille News

The economic numbers keep pouring in and they continue to look good. Unemployment claims are down. The demand for hiring is increasing. There is money in the system.

It is all very attractive. But that’s what we’re seeing right now. The market is not really interested at the moment. He’s looking right now and forecasting six months or a year from now.

And right now, what he’s telling us is that e-commerce is part of our economic reality. Stores that rely on foot traffic will face more challenges as shoppers are now ready to shop online and spend their free time doing more than just going to the store.

This is not all good news for retail stocks as we move forward. They may recover from the pandemic, but they may not perform well in an easy economic recovery.

These are the seven retail stocks that you don’t want in your shopping cart going forward:

General Dollar (NYSE :DG)
Dollar tree (NASDAQ :DLTR)
Ralph Lauren (NYSE :RL)
Ross Stores (NASDAQ :SENSE)
Alliance of Walgreens boots (NASDAQ :WBA)
Walmart (NYSE :WMT)
CVS Health (NYSE :CVS)

Retail stocks to avoid: Dollar General (DG)

Source : Jonathan Weiss / Shutterstock.com

If you live beyond the suburbs of big cities, you’ve seen more than a few Dollar General stores. It has more than 16,000 in 45 states.

In rural America, DG is about as common as corn or soybean fields. It’s the go-to store for just about anything you need that doesn’t need refrigeration, from wrapping paper and groceries to motor oil.

And, all of the items are very affordable. This is what made DG such a big player after the 2008 market crash. It was a convenient place to buy cheap stuff when money was tight.

But all the money the government has pumped into the system to keep the economy afloat, combined with the lockdowns associated with the pandemic, have moved consumers online.

Now DG must recover from the pandemic and get back to business. It’s going to be difficult now that consumers are browsing the virtual storefronts of digital retailers.

The title has been basically stable since the start of the year, and it is not in a strong position to regain much ground.

This action obtains a Portfolio Grader “D” rating.

Dollar Tree (DLTR)

A Dollar Tree store (DLTR) during the dayA Dollar Tree store (DLTR) during the day

Source: digital reflections / Shutterstock.com

Like its main competitor DG, DLTR is in the discount variety store business. It has 15,000 stores in 48 states and five provinces of Canada, but has less than half of DG’s market capitalization.

The mere fact that there is such a differentiation in market capitalization for two retail stocks doing almost the same thing is a clear sign that DLTR is the most junior deal in terms of the markets. But it does offer a bit of diversification with its Canadian operations that a weaker dollar will benefit from. It is also a little cheaper.

The same challenges exist for DLTR as it does for DG, so this retail inventory sector doesn’t have much tailwind unless something bad happens to the economy.

The stock is down 6% year-to-date and may not come out of the red in the coming quarters.

This action obtains a Portfolio Grader “D” rating.

Retail Stocks To Avoid: Ralph Lauren (RL)

A Ralph Lauren point of sale, October 21, 2013, Geneva, Switzerland.A Ralph Lauren point of sale, October 21, 2013, Geneva, Switzerland.

Source : Martin Good / Shutterstock.com

Over the decades, the RL brand has become one of the symbols of American fashion. Its clean lines and simple designs helped democratize fashion in the United States without being ostentatious. From farmers to bankers, teachers to C-suite gamers sport RL tags.

Yet while there are clothing lines as high end as fashion, RL has been keen to make its products accessible to the general public at more affordable prices. The sheer volume of clothing it manufactures means the brand is available in department stores as well as discount fashion outlets.

RL is an odd combination of a premium brand with a lot of distribution that almost goes against the exclusivity of the brand as a whole. And its low-end distribution has certainly been hit by the pandemic. In addition, online retail stocks have grown into low and mid RL market penetration with new brands and better distribution channels.

It will be difficult to rebuild its glorious past if the trends continue and RL cannot find a way to improve its broad market strategy. The stock is up 15% year-to-date, but earnings remain negative.

This action obtains a Portfolio Grader “D” rating.

Ross Stores (ROST)

Retail stocks to buy for the long term: Ross Stores (ROST)Retail stocks to buy for the long term: Ross Stores (ROST)

Source : Andriy Blokhin / Shutterstock.com

This discount fashion retailer has never voluntarily adopted any type of e-commerce. She continues to believe that the scavenger hunt vibe of her retail stores is her unique selling proposition.

He wants the bodies of the store to roam the aisles in search of hidden treasures. It also means shoppers can go out and shop for pants and end up with a dog bed, kitchen utensils, and pants. This approach makes ROST unique among retail stocks.

While this has been very effective over the past decade in attracting fashion-conscious consumers who could purchase famous brands at a discount, e-commerce is now a bigger threat to its model.

ROST has over 1,500 stores in the United States and has been very popular with a new generation of buyers after the 2008 stock market crash and students struggling with student debt. Its recent first quarter results were also strong.

But the market is looking to the future and the lack of an online presence is jeopardizing its long-term strategy.

Retail Stocks To Avoid: Walgreens Boots Alliance (WBA)

Walgreens (WBA) store exterior and sign in Pompano Beach, FloridaWalgreens (WBA) store exterior and sign in Pompano Beach, Florida

Source : saaton / Shutterstock.com

With more than 9,000 Walgreen stores in all 50 states and 4,000 more in 10 other countries, WBA is a major player in the pharmacy industry.

But its size was not a big advantage when the pandemic hit, as there was nowhere to hide. And he was still in the process of settling the massive acquisition of half of the Rite aid (NYSE :RAD) stores a few years ago.

You don’t think much of WBA as part of the retail inventory business, but a big part of their business is selling all of the products before they get to the drugstore counter. That is why in many stores the pharmacy is placed at the back of the store, so you have to go past all the stuff before you get to the counter. With the drop in foot traffic, the profits have been difficult.

But WBA sold its drug wholesaling business in Europe earlier this month, which will reduce its debt by $ 16 billion. And as the economy returns to normal, business in stores will pick up. The stock is up 31% year-to-date and has a dividend of 3.4%. But he still has some challenges.

This action obtains a Portfolio Grader “D” rating.

Walmart (WMT)

Image of the Walmart logo (WMT) on the Walmart store with a clear blue sky in the backgroundImage of the Walmart logo (WMT) on the Walmart store with a clear blue sky in the background

Source : Jonathan Weiss / Shutterstock.com

Of all the retail stocks that could make this list, WMT is perhaps the most surprising. It is a large retailer with a strong presence in e-commerce. Its loyal customer base continues to appear in stores and online.

The challenge for WMT is that it was one of the retail stocks that was ranked a winner because of its strong branding and strong e-commerce and same-day pickup strategies. This means that the action was offered during the pandemic. Its current price / earnings ratio is around 32x, which is pretty high. The average P / E of retail stocks is around 20x.

This means he has high expectations of her as we go along. He can reach that mark. This may not be the case. But the WMT is already richly valued and there is more downside risk than upside at this point. It’s definitely a royalty among retail inventory, but there’s no point in buying it at a premium.

WMT stock is down 4% year-to-date.

This action receives a Portfolio Grader “D” rating.

Retail stocks to avoid: CVS Health (CVS)

outside a CVS pharmacyoutside a CVS pharmacy

Source : Jonathan Weiss / Shutterstock.com

Along with WBA, it is the other major drugstore chain in the United States, with nearly 10,000 locations.

These large drugstore retail stocks quickly moved into the pharmacy benefit management (PBM) space after the Affordable Care Act came into effect in order to boost business and control drug costs.

But now that they’ve built this platform at great expense, new competition is involved in the form of other retail stocks, like WMT. All of the work CVS put into its new division is now being challenged by non-pharmacy-focused retailers, both in-store and online.

This is the competitive challenge of the future. CVS’s market cap is more than double that of the WBA at this point, but that doesn’t shield it from the changing market.

The stock is up 20% since the start of the year, but it will be a challenge to continue these types of gains.

As of the publication date, Louis Navellier has no equity positions in this article. Louis Navellier did not have (directly or indirectly) any other position on the securities mentioned in this article. The InvestorPlace research staff member primarily responsible for this article did not hold (directly or indirectly) any positions in any of the securities mentioned in this article.

The opinions expressed in this article are those of the author, subject to the InvestorPlace.com publishing guidelines.

Louis Navellier, who has been called “one of the most important fund managers of our time”, broke the silence in this shocking “say it all” video … exposing one of the most shocking events in the history of our country… and the moving American must do today.