Market Overview

Cost Plus and Pier 1 to Open Near 52-Week Highs

The Nasdaq closed up more than 1%, the Dow and S&P 500 less than 1%, yesterday. Plenty of stocks rose to new 52-week highs during the trading session. Among them were Cost Plus World Market (NASDAQ: CPWM) and Pier 1 Imports (NYSE: PIR), which reached multiyear highs of $13.54 and $15.80 per share, respectively.

Cost Plus said it saw strong holiday sales, including same-store sales 7.4% higher than a year ago. The CEO commented that the retailer expects to meet or exceed the high end of previously announced guidance. Cost Plus is a specialty retailer of casual home living and entertaining products with more than 250 stores in 30 states. The Oakland, Calif.-based company has a market cap of $297.7 million and it was founded in 1946.

Its earnings per share are anticipated to grow 10.0% over the next five years. The return on equity is 17.6%, but the P/E and PEG ratios are above the industry average. And note that short interest is about 16% of the float. But three of five analysts surveyed rate the stock a Strong Buy; none recommend selling. The share price has surged more than 42% in the past month and is about 139% higher than the 52-week low. The stock has outperformed competitors Bed Bath & Beyond (NASDAQ: BBBY) and Williams-Sonoma (NYSE: WSM) over the past six months.

See also: Should We Prepare for a Coming Retail Implosion?

Pier 1 reported that its same-store sales increased 11.3% in December. Revenue for Q4 and the fiscal year are expected to be more than 9% higher when the retailer reports results in February. The company is an importer and specialty retailer of decorative home furnishings and gifts, and it has more than 1,000 stores in North America. It is headquartered in Fort Worth, Tex., and has a market cap of $1.7 billion.

Pier 1 has a long-term EPS growth forecast of 13.4% and a return on equity of 30.3%. The P/E and PEG ratios are in line with the industry average but its operating margin is higher than average. Short interest is 7.7% of the float. The analysts' consensus recommendation is to buy the stock. The share price is almost 31% higher than three months ago, as well as up almost 62% from a year ago. Over the past six months, the stock has also outperformed Bed Bath & Beyond and Williams-Sonoma, as well as the broader markets.

ACTION ITEMS:

Bullish: Investors interested in exchange traded funds invested in Cost Plus and/or Pier 1 might want to consider the following trades:

  • SPDR S&P Homebuilders (NYSE: XHB) is more than 58% higher than the 52-week low.
  • Guggenheim Raymond James SB-1 Equity (NYSE: RYJ) is more than 36% higher than the 52-week low.
  • First Trust Value Line 100 ETF (NYSE: FVL) is more than 36% higher than the 52-week low.
  • PowerShares Dynamic Retail (NYSE: PMR) is more than 32% higher than the 52-week low.
Bearish:

Traders may prefer to consider these alternative positions:

  • Kirkland's (NASDAQ: KIRK) is up more than 87% from the 52-week low.
  • Macy's (NYSE: M) is up more than 59% from the 52-week low.
  • TJX Companies (NYSE: TJX) is up more than 46% from the 52-week low.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: 52-Week Highs Bed Bath & Beyond Cost Plus World MarketLong Ideas Short Ideas Pre-Market Outlook Trading Ideas ETFs

 

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