Traditional Retailers: Will Brick-and-Mortar Stores Disappear?
Excerpted from the April 2016 Issue
Our answer is “No, at least not for many decades”--but to look at the stock performance of most traditional retailers over the past year, it appears that many investors disagree. When some retailers posted disappointing results last autumn, many retail stocks dropped 40-50% from highs set only a few months earlier.
To be sure, online shopping is going to continue to grow; but we believe that the best of the traditional retailers will not only survive but will thrive as they leverage their strong brands to put together an appealing combination of online and brick-and-mortar shopping experiences. These stronger players will gain market share as some of their weaker rivals are not able to adapt to the evolving retail environment. The five companies discussed in our April distressed investing newsletter all have good brands and relatively strong balance sheets, pay a decent dividend and have stocks trading well below their 12-month highs.
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Amazon joined Apple in reaching a $1 trillion market capitalization. $1 trillion is about the same as the total value of New York City property and the total value of loans at JP Morgan, the nation’s largest bank in terms of assets. Jeff Bezos’ $160 billion stake would place him (personally) as the #33 largest company in the S&P 500 in terms of market cap, next to Coca-Cola, Disney and Netflix. We aren’t bold enough to predict whether the shares will continue upwards or if they are in a bubble reaching maximum inflation. Setting aside for a moment their investment prospects, let’s admire the truly remarkable milestone that these two companies have reached.
EV/EBITDA: What Is It & Why Are We Using It More?
In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple. We thought it might be useful to describe this measure and why we like it.
Turnaround Letter Stock Pick Named Top Performer of 2017
What Last Year's Top Stock Pickers Are Buying in 2018
This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.
George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."
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