Market Overview

Short Interest Swings in Retail Stocks (BBY, DG, TJX)

The short interest in big retail companies was mixed as the holiday shopping season got underway. Shares sold short in Amazon.com (NASDAQ: AMZN), CVS Caremark (NASDAQ: CVS), Lowe's (NASDAQ: LOW) and Target (NYSE: TGT) increased somewhat between the November 15 and November 31 settlement dates.

But short interest in Costco Wholesale (NASDAQ: COST), Gap (NYSE: GPS), Home Depot (NYSE: HD), Macy's (NYSE: M), Walmart (NYSE: WMT) and Whole Foods (NASDAQ: WFM) declined during that time.

Three big retailers saw larger swings in short interest between the November 15 and November 31 settlement dates. They were Best Buy (NYSE: BBY), Dollar General (NASDAQ: DG) and TJX Companies (NASDAQ: TJX).

Best Buy

This struggling consumer electronics retailer saw short interest rise more than 39 percent in late November to 36.93 million shares. That was the highest number of shares sold short since August, as well as the largest average daily volume this year. And that brings short interest to about 14 percent of the float.

Founder and former chairman Richard Schulze has been trying to regain control of Best Buy by buying it out. In late November, the company had a good Black Friday, but it also posted a third-quarter loss and saw its credit rating downgraded. The company now has a market capitalization a little over $4 billion and a dividend yield near 3.4 percent. The return on equity and the long-term earnings per share (EPS) growth forecast are both in the red.

It is no surprise that almost all of the 22 analysts surveyed by Thomson/First Call recommend holding shares. For what it is worth, their mean price target is more than eight percent higher than the current share price, though that target is well below the 52-week high from back in March. Over the past six months, the stock has underperformed Walmart and Target, but it has managed to outperform RadioShack (NYSE: RSH).

Dollar General

Shares sold short in this discount retailer jumped more than 59 percent to about 7.32 million. That was the highest short interest since June, with the highest average daily volume this year. The short interest is more than two percent of the float.

This Tennessee-based company operates more than 10,000 stores in 40 states, and it has a market cap of more than $14 billion. Dollar General recently joined the S&P 500, and it launched new mobile apps for the iPhone and Android smartphones just ahead of Cyber Monday. The company's return on equity is more than 19 percent, and the long-term EPS growth forecast is about 17 percent.

Out of 25 analysts polled, 11 rate the stock at Strong Buy, and eight others also recommend buying shares. The mean price target indicates upside potential of more than 25 percent and would be a new multi-year high. But shares have fallen almost 15 percent in the past six months. In that time, the stock has underperformed Family Dollar (NYSE: FD) and Walmart, as well as the S&P 500.

TJX Companies

Short interest in this Framingham, Massachusetts-based company increased more than 43 percent to 9.57 million shares. That was the third consecutive period of rising short interest and the largest number of shares sold short since February. But short interest is less than two percent of the float.

The operator of the T.J. Maxx and Marshalls chains reported better-than-expected revenue for the third quarter and same-store sales growth in November. The company now has a market cap of about $31 billion. The long-term EPS growth forecast of this S&P 500 component is more than 13 percent, and the return on equity is more than 53 percent. The dividend yield is about one percent.

Of the 28 surveyed analysts who follow the stock, 16 recommend buying shares; none recommend selling. Their mean price target, or where they expect the share price to go, is more than 12 percent higher than the current share price, which would be a multiyear high. Shares have pulled back from a recent 52-week high, though. And over the past six months, TJX has outperformed competitor Ross Stores (NASDAQ: ROST), as well as the S&P 500.

Posted-In: Amazon.com best buy costco wholesale cvs caremark dollar generalLong Ideas Short Ideas Trading Ideas Best of Benzinga

 

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