Market Overview

Short Sellers Shying Away from Walmart, Gap, Other Retailers

Short sellers generally have found less to like in the retail sector, judging by changes in the short interest of some of the nation's biggest retailers between the July 31 and August 15 settlement dates. Notable exceptions include Amazon.com (NASDAQ: AMZN), Target (NYSE: TGT), Walgreen (NYSE: WAG) and Whole Foods Market (NASDAQ: WFM), which all saw some increase in shares sold short, and Bed Bath & Beyond (NASDAQ: BBBY), which saw short interest rise 24.4 percent, even though an analyst did upgrade the stock during the period.

But short interest fell somewhat in early August for the likes of CVS Caremark (NYSE: CVS), Home Depot (NYSE: HD), Lowe's (NYSE: LOW), Macy's (NYSE: M) and TJX Companies (NASDAQ: TJX). Below is a look at some of the big retailers that saw the largest drop in short interest as of the August 15 settlement date:

Walmart

The world's largest retailer saw short interest retreat 18.1 percent to 21.78 million shares, or about 1.3 percent of the float. The average daily volume was the lowest it had been since February. Walmart (NYSE: WMT) has a market capitalization of more than $245 billion, and its dividend yield is about 2.2 percent. The price-to-earnings (P/E) ratio is less than the industry average, and the return on equity is near 23.5 percent. The stock has pulled back about 3 percent from the recent 52-week high, and the share price is more than 23 percent higher than six months ago.

Costco

Short interest in Costco Wholesale (NASDAQ: COST) fell 21.9 percent to 5.23 million shares. That represents about 1.2 percent of the float. The average daily share volume was the lowest it has been all year. This S&P 500 component has a market cap of more than $41 billion and a dividend yield near 1.1 percent. Its long-term EPS growth forecast is more than 13 percent. Just 13 of 27 analysts polled by Thomson/First Call recommend buying shares. The current share price has overrun the mean price target of analysts. Shares are trading about 14 percent higher year-to-date.

The Gap

Gap (NYSE: GAP) saw short interest decline 19.5 percent to its lowest reading in a year. Some 12.03 million shares sold short as of the August 15 settlement date, which represents 4.2 percent of the float. The San Francisco-based purveyor of apparel and accessories has a market cap of more than $16 billion and a dividend yield near 1.4 percent. Its return on equity is about 29.5 percent and the operating margin is better than the industry average. The mean target price is less than 4 percent higher than the current share price, which hit a multiyear high last week.

Dollar General

Short interest in this discount store operator was down 21.4 percent to 3.96 million shares. That represented 1.4 percent of the float, and the daily average volume was the lowest it has been since March. Dollar General (NYSE: DG) has pulled back more than 6 percent in the past two weeks, but it is expected to post solid second-quarter results next week. The long-term EPS growth forecast is more than 17 percent and the return on equity is nearly 19 percent. The mean price target is about 17 percent higher than the current share price, as well as higher than the 52-week high.

Posted-In: Amazon.com Bed Bath & Beyond CostcoLong Ideas Short Ideas Analyst Ratings Movers Trading Ideas Best of Benzinga

 

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