Small-Cap Retail Options to Watch in 2013
Small-Cap Retail Options to Watch in 2013
As anticipated, January brought with it figures confirming sluggish retail sales after a general increase in both taxes and gasoline prices. While a 0.5 percent rise in sales was reported in December of 2011, this past December showed a dismal 0.1 increase in overall sales in the retail sector. Are the numbers destined to remain essentially flat or will they rebound and make for profitable future investment options? And if so, what are the market giants and emerging growth companies that you should definitely keep an eye on?
A drop in consumer sales was already in the cards because of the expiration of the pay-roll tax holiday, but the situation may not last long according to experts. The recovery in the real estate niche is a strong indicator of things to come and according to chief economist Robert Dye, the rise in housing prices and a boost in equities will help to keep consumer sales at moderate, if not better than moderate levels. While there was a drop in retail sales for clothing stores and furniture outlets; retail marts, sporting goods stores and electronic appliance dealers flourished in the last quarter and projected a general increase in sales.
Having said that, the emerging growth company that first comes to mind is Core-Mark Holding Company, Inc. (NASDAQ: CORE). CORE has shown a steady performance over the past couple of months in the retail sector. Several other small-cap companies that have garnered attention based on solid performance are; Zumiez Inc. (NASDAQ: ZUMZ), America’s Car-Mart Inc. (NASDAQ: CRMT) and Shoe Carnival, Inc. (NASDAQ: SCVL). America’s Car-Mart, in particular, is one retailer that should be on the top of your list. Its large profit margins have overshadowed those of two market giants in this area, namely CarMax (NYSE: KMX) and AutoNation, Inc. (NYSE: AN). Zumiez has also managed to produce solid sales in the sporting goods industry. Sales rose by 9 percent in December and managed to stay at 7 percent in January.
The increase in consumer spending may be slow, but it is definitely creeping up which keeps the door open for future profitable investment opportunities. If you prefer a larger play with less volatility, Wal-Mart Stores, Inc. (NYSE: WMT) has emerged as the ultimate winner with its sales managing to keep pace despite the iffy economy. Target Corporation (NYSE: TGT), Dollar General Corporation (NYSE: DG) and CVS Caremark Corporation (NYSE: CVS) are also close behind, and are good choices when it comes to steady performance in the market despite the odds.
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The increase in consumer spending may be slow, but Zumiez looks impressive. Will put it in my watch list after some research.
Zumiez finally appears to be breaking out of that downtrend that has been plaguing it for over 6 months now. Walmart’s recent sales drop has me worried about the rest of the industry but some of that may have been due to the fiscal cliff fears.
I still consumer spending over the long run will be higher. These stocks should be re-priced as consumer spending moves up.
Nice piece… Consumer spending, is tied to economic growth… the lingering threat of another recession, will definately hurt most retailers..