With supply chain disruptions and lower traffic in physical brick-and-mortar stores affecting sales for major retailers like Bed Bath & Beyond Inc. (BBB), investors may have cause for concern heading into the holiday season.
Additionally, e-commerce giant Amazon.com Inc. (AMZN, Financial) has begun offering Black Friday deals over a month in advance and is encouraging consumers to get their shopping done early before demand picks up and popular items become unavailable.
Despite the uncertain environment, however, value opportunities could be found among retail companies that are outperforming the Standard & Poor’s 500 Index. As of Oct. 4, the GuruFocus All-in-One Screener, a Premium feature, found several stocks that with a market cap over $5 billion that had a higher return relative to the index for the period. It also looked at stocks with price-earnings ratios below 14 and predictability ranks of at least one out of five stars.
Based on these criteria, retail stocks that outperformed the S&P 500 by at least 15% over the past 12 months are Bath & Body Works Inc. (BBWI, Financial), Williams-Sonoma Inc. (WSM, Financial), Dick’s Sporting Goods Inc. (DKS, Financial), Tapestry Inc. (TPR, Financial) and Kohl’s Corp. (KSS, Financial). The S&P 500 Index has gained more than 25% over the same period.
Bath & Body Works
Having climbed nearly 140% over the past year, Bath & Body Works (BBWI, Financial) has a $69.51 billion market cap; its shares were trading around $649.94 on Monday with a price-earnings ratio of 11.66, a price-book ratio of 4.59 and a price-sales ratio of 5.85.
The GF Value Line indicates that the stock is significantly overvalued currently based on historical ratios, past performance and future earnings projections.
Formerly known as L Brands, the Columbus, Ohio-based company, which sells bath, beauty and home fragrance products, changed its name to Bath & Body Works on Aug. 2 following the spinoff of lingerie brand Victoria’s Secret & Co. (VSCO, Financial).
GuruFocus rated Bath & Body Works’ financial strength 4 out of 10 and its profitability 7 out of 10. It has a one-star predictability rank. According to GuruFocus, companies with this rank return an average of 1.1% annually over a 10-year period.
Of the gurus invested in Bath & Body Works, Steve Mandel (Trades, Portfolio) has the largest stake with 9.92% of outstanding shares. PRIMECAP Management (Trades, Portfolio) and Philippe Laffont (Trades, Portfolio) also have significant positions.
Williams-Sonoma
With a gain of over 50% year to date, Williams-Sonoma has a market cap of $12.72 billion; its shares were trading around $172.32 on Mondaywith a price-earnings ratio of 13.62, a price-book ratio of 8.35 and a price-sales ratio of 1.73.
According to the GF Value Line, the stock is significantly overvalued.
The retailer, which is headquartered in San Francisco, sells a variety of kitchen ware and home furnishings.
Williams-Sonoma’s financial strength was rated 7 out of 10 by GuruFocus. Its profitability fared even better with a 9 out of 10 rating. The company has a perfect five-star predictability rank. GuruFocus says companies with this rank return, on average, 12.1% annually.
With a 0.37% holding, Jim Simons (Trades, Portfolio)’ Renaissance Technologies is the company’s largest guru shareholder. Ken Heebner (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Pioneer Investments, Jeremy Grantham (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), John Hussman (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Baillie Gifford (Trades, Portfolio) also own the stock.
Dick’s Sporting Goods
Advancing nearly 100% over the past year, Dick’s Sporting Goods (DKS, Financial) has a $10.67 billion market cap; its shares were trading around $120.26 on Monday with a price-earnings ratio of 10.03, a price-book ratio of 3.38 and a price-sales ratio of 1.06.
Based on the GF Value, the stock appears to be significantly overvalued currently.
The Coraopolis, Pennsylvania-based retailer sells a wide array of sports gear, equipment, apparel and footwear.
GuruFocus rated Dick’s Sporting Goods’ financial strength 6 out of 10 and its profitability 8 out of 10. It also has a five-star predictability rank.
Simons’ firm has the largest position with 0.52% of its outstanding shares. Heebner, Louis Moore Bacon (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Hussman, Jones, Greenblatt, Caxton Associates (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) are also shareholders.
Tapestry
Up 135.17% from a year ago, shares of Tapestry (TPR, Financial) were trading around $37.98 on Monday with a market cap of $10.56 billion, a price-earnings ratio of 12.86, a price-book ratio of 3.25 and a price-sales ratio of 1.87.
The GF Value Line suggests the stock is currently modestly overvalued.
The luxury goods retailer headquartered in New York owns fashion brands like Kate Spade, Coach and Stuart Weitzman.
Tapestry’s financial strength was rated 5 out of 10 by GuruFocus. Its financial strength fared slightly better with a 7 out of 10 rating. It has a low predictability rank, however, of one star.
Of the gurus invested in Tapestry, Pioneer Investments has the largest holding with 0.17% of outstanding shares. Other top guru shareholders include John Rogers (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Richard Snow (Trades, Portfolio), Greenblatt, Robert Olstein (Trades, Portfolio), Ainslie, Scott Black (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Jeff Auxier (Trades, Portfolio) and First Eagle Investment (Trades, Portfolio).
Kohl’s
Climbing 63.76% over the past year, Kohl’s (KSS, Financial) has a $7.37 billion market cap; its shares were trading around $48.94 on Monday with a price-earnings ratio of 10.43, a price-book ratio of 1.45 and a price-sales ratio of 0.42.
According to the GF Value Line, the stock is fairly valued currently.
The Menomonee Falls, Wisconsin-based company operates a chain of department stores across the U.S.
GuruFocus rated Kohl’s financial strength 5 out of 10, while its profitability scored a 7 out of 10 rating. The company also has a one-star predictability rank.
With a 1.67% stake, the T Rowe Price Equity Income Fund (Trades, Portfolio) is the company’s largest guru shareholder. David Tepper (Trades, Portfolio), Cohen, Simons’ firm, Grantham, Snow, Hussman, Michael Price (Trades, Portfolio) and Jones also have positions in Kohl’s.
