Market Overview

Four Retail Stocks That Doubled in Six Months (BONT, LL, OSTK, ZLC)

Major retailers are beginning to share their third-quarter results, with JCPenney (NYSE: JCP), Macy's (NYSE: M) and Nordstrom among those on tap this week, and with big-box store operators Home Depot (NYSE: HD), Target (NYSE: TGT) and Walmart (NYSE: WMT) on the schedule for next week. Between that and the fast-approaching holiday shopping season, retail is going to be in the spotlight for a while.

Here is a quick look at four retail stocks that have seen their share prices more than double in the past six months: Bon-Ton Stores (NASDAQ: BONT), Lumber Liquidators (NYSE: LL), Overstock.com (NASDAQ: OSTK) and Zale (NYSE: ZLC). Note the healthy short interest and the general lack of implied upside potential.

Bon-Ton Stores

Shares of this department store operator are trading about 289 percent higher year to date, including up about 17 percent in the past month. The York, Pennsylvania-based company operates more than 250 stores under various banners and it sports a market capitalization near $250 million. Its long-term earnings per share (EPS) growth forecast is about 18 percent, but the return on equity is in negative territory. The forward earnings multiple is a bit less than the industry average price-to-earnings (P/E) ratio, and the dividend yield is about 1.5 percent. But note that short interest is more than 31 percent of the float. Yet two of the three analysts surveyed by Thomson/First Call who follow the stock recommend buying shares. However, the current share price has outrun the analysts' mean price target. The stock has easily outperformed competitors such Dillard's (NYSE: DDS) and Macy's, as well as the broader markets, over the past six months.

Lumber Liquidators

This specialty retailer of hardwood flooring and accessories is more than 224 percent higher than at the beginning of the year and reached a multi-year high last week. The Toano, Virginia-based company has a market cap of about $1.5 billion, and the long-term EPS growth forecast is about 17 percent. Third-quarter results creamed consensus estimates. The return on equity is more than 19 percent and the return on investment is almost 19 percent. But shares sold short are more than 23 percent of the float. And only two of the 12 analysts surveyed recommend buying shares, though just one recommends selling. The mean price target, or where analysts expect the share price to go, is a little less than the current share price. Over the past six months, the stock has easily outperformed the likes of Home Depot and Lowe's Companies (NYSE: LOW), as well as the broader markets.

Overstock.com

This online discount retailer saw its share price jump more than 40 percent after it reported swinging to a third-quarter profit, accounting for much of the share price increase in the past six months. The company is headquartered in Salt Lake City and has a market cap near $360 million. The forward earnings multiple is in line with the industry average P/E ratio. The long-term EPS growth forecast is about 20 percent, though the return on equity is only about 13 percent. Short interest is almost 19 percent of the float. Only two analysts were polled, but one of them rates the stock at Strong Buy. Perhaps not surprisingly, the mean price target is less than the current share price here too. The share price reached a 52-week high last week. The recent post-earnings jump in the share price helped the stock easily outperform competitors Amazon.com (NASDAQ: AMZN) and eBay (NASDAQ: EBAY) over the past six months

Zale

Shares of this fine jewelry retailer are trading near a multi-year high, despite facing resistance at $8.50 since September. The $220 plus million market cap company is headquartered in Irving, Texas. Its long-term EPS growth forecast is only about eight percent and the return on equity is in the red. The forward earnings multiple is a little higher than the industry average P/E ratio. Short interest is nearly nine percent of the float. But of four analysts surveyed, three rate the stock at Strong Buy. And here the analysts feel shares have some room to run as their mean price target indicates potential upside of more than 17 percent. That is a level the stock has not seen since 2009. The current share price is nearly 185 percent higher year to date, despite pulling back a bit in the last couple of days. Over the past six months, the stock has outperformed Signet Jewelers (NYSE: SIG) and Tiffany (NYSE: TIF).

Posted-In: Amazon.com Bon-Ton Stores Dillard'sLong Ideas News Short Ideas Retail Sales Trading Ideas Best of Benzinga

 

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