Retailing

Feature The European stock market has a hidden gem: its clothing and accessories sector. Since the turn of the millennium, the sector’s profits are up by a thousand percent (Feature Chart). In this Special Report we propose that the megatrend has further to run, as its principle driver is still…

Remodeling Our View On Home Improvement Retail…

Highlights Portfolio Strategy Higher interest rates, with the Federal Reserve tightening monetary policy three more times in the next seven months, will be the dominant theme next year. All four of our high-conviction underweight calls are levered to this theme. The later stages of the U.S.…

Neutral When we downgraded the S&P home improvement retail index (HIR) to neutral in September, the core of our thesis was that fixed residential investment as a percentage of GDP appeared to have peaked, up 50% from trough to the recent highs, whereas relative HIR performance is up 170% in…

  Neutral In our recent initiation of coverage on the newly minted Communication Services sector, we examined the impact of a variety of technology and consumer discretionary stocks being pulled together to form a new GICS1 sector.1 One sector that saw some important changes was the S…

  Neutral As we highlighted in yesterday’s Daily Insight, we are firmly housing market bulls. However, we are concerned that too much euphoria is priced into home improvement retail (HIR) equities. Three reasons underlie our softening EPS stance for home improvement retailers. First,…

Highlights Portfolio Strategy The firming long-term housing demand backdrop, lumber price cost relief, steady new home prices and favorable new home sales expectations, all signal that it is time to buy homebuilders. On the flip side, we do not want to overstay our welcome in the S&P home…

Overweight The S&P home improvement retail index (HIR) has historically benefitted from rebuilding efforts following costly hurricanes hitting the U.S. However, these spikes in relative performance largely track the earnings impact of the disasters; that is to say that they are one-off and do…

Overweight Consumer discretionary giant Home Depot has put together a string of solid earnings reports and outlook improvements that have served to keep the S&P home improvement retail index at its lofty levels for the past several years. We think more is to come. Lumber prices, though off…