Industry Rank Analysis 6-29-11
The retreat in gasoline prices should mean that consumers have more money to spend elsewhere. That is good news for some of the retailers. While job growth has been slow, adding just 54,000 jobs in May, it has been positive for over a year now.
People with jobs are more likely to go shopping at the mall than those who are unemployed. The retail groups that are showing up at the top of the Zacks industry rank list are a diverse bunch.
Zacks Industry Classifications
The Zacks industry classifications are very fine, with 256 different industries tracked. It is not particularly noteworthy if a single small industry shows up doing well, a single firm with good news can propel a #1 or #2 firm industry to the top of the charts.
It is interesting when you see a cluster of similar industries at the top of the list. The same holds true for the bottom of the list. The definition of size that matters here is not the total sales or market capitalization, but the number of companies in the “industry.”
3 of the Top 5 Industries
There are four retail “industries” in the top 20, and three in the top five spots. None of these industries is particularly large by number of firms That, of course, makes it easier to float to the top (or sink to the bottom), but still, the concentration is worth noting. The high end of retail seems particularly strong.
The Jewelry stores (four firms) are in second place among the 256 Zacks industries, an improvement of two spots from last week. The average rank improved to 1.75 from 2.00. Two other retail groups, the Department Stores (six firms) and the Convenience Stores (four firms) are right on its heels, tied for third place with an average rank of 2.00.
The Department Stores were unchanged from last week in both place on the list and average rank. The Convenience Stores jumped 22 spots as the average rank last week was 2.50. Much further down the list, but still pretty impressive were the Wholesale Computer stores, in 18th place and improvement of 21 spots on the list as the average rank fell to 2.40 from 2.60.
The first table shows the Retail stocks from these groups that hold the vaunted Zacks #1 Rank (Strong Buy). The second table shows the Zacks #2 Ranked (Buy) firms. If the Zacks ranks were random, one would expect that only 5% of the firms in an industry would be “#1’s” and 15% would be “#2’s”.
That is not the case with these Retailers. There are a total of 22 firms in the four industries. Seven of them (31.8%) have number one ranks, and six (27.3%) have number two ranks. Keep in mind that the estimates are rising (a key to having a strong Zacks Rank). Since an estimate in motion tends to stay in motion, it is likely that these firms will actually earn more than the current consensus estimates are forecasting. That in turn means that the “real P/E” is even lower than shown in the tables below.
Valuations on these firms are, for the most part, quite reasonable, particularly if you are willing to look out to next year’s expected earnings. Most of the firms are small or mid cap names, but there are choices that could fit any size portfolio.
Number 1-Ranked Firms
| Company | Ticker | Market Cap ($ mil) | P/E Using Curr FY Est | P/E Using Next FY Est | % Change Curr FY Est – 4 wk | % Change Next FY Est – 4 wk | Current Price |
| Macys Inc | M | $11,931 | 11.23 | 9.91 | 0.48% | 0.87% | $28.02 |
| Tiffany & Co | TIF | $9,651 | 21.33 | 18.44 | 6.66% | 7.18% | $75.70 |
| Signet Grp Plc | SIG | $3,789 | 13.08 | 11.58 | 7.81% | 5.49% | $43.85 |
| Dillards Inc-A | DDS | $2,754 | 13.65 | 11.52 | 0.00% | 0.00% | $50.69 |
| Pc Connection | PCCC | $211 | 7.86 | 6.83 | 0.00% | 0.00% | $7.86 |
| Travelcenters | TA | $90 | 16.1 | 6.24 | -22.50% | N/A | $4.99 |
| Pc Mall Inc | MALL | $90 | 7.46 | 6.03 | 0.00% | 0.00% | $7.24 |
Number 2-Ranked Firms
| Company | Ticker | Market Cap ($ mil) | P/E Using Curr FY Est | P/E Using Next FY Est | % Change Curr FY Est – 4 wk | % Change Next FY Est – 4 wk | Current Price |
| Penney (Jc) Inc | JCP | $7,871 | 15.69 | 13.02 | -1.59% | -1.03% | $34.24 |
| Saks Inc | SKS | $1,789 | 33.24 | 23.28 | 6.02% | 1.81% | $10.97 |
| Caseys Gen Strs | CASY | $1,646 | 14.17 | 12.01 | 5.46% | 0.84% | $43.37 |
| Pantry Inc | PTRY | $400 | 15.17 | 10.15 | 2.15% | 0.00% | $17.40 |
| Movado Grp Inc | MOV | $305 | 24.66 | 21.36 | 3.82% | 24.60% | $16.77 |
| Navarre Corp | NAVR | $71 | 16.17 | 12.13 | 71.43% | N/A | $1.94 |
DILLARDS INC-A (DDS): Free Stock Analysis Report
PENNEY (JC) INC (JCP): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
SIGNET GRP PLC (SIG): Free Stock Analysis Report
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