Retail will be in the spotlight in the coming days thanks to reports from industry leaders including Walmart, Target, Kohl’s and Macy’s.
One big question that investors face is how well these companies are grappling with the dual threat of supply chain bottlenecks and soaring inflation this holiday season.
Despite these obstacles, New Street Advisors founder Delano Saporu believes in the power of US buyers.
“Most importantly in terms of consumer sentiment, I still think it’s very, very strong,” Saporu told CNBC’s Trading Nation on Friday. “Consumers are still full of cash, consumers want to spend during the holiday season. Now this is the main strength. “
Target is one of the stocks coming this week that Saporu will be watching closely.
“Target is really in an optimal position right now because they are trading at a relatively… low valuation,” Saporu said.
He points to the increase in store numbers and investment in their e-commerce presence as reasons for optimism.
“These areas, these initiatives bode well for people who have bought stocks to continue buying and / or holding their positions,” Saporu said.
Target plans to report earnings on Wednesday. Analysts polled by FactSet are expecting $ 2.82 per share in earnings for the October quarter and sales will rise 8%.
Matt Mayley, chief market strategist for Miller Tabak, said Walmart can handle supply chain and inflation issues well during the holidays.
“A lot of the goods are supplied domestically, so it’s good for them. And of course, if people are worried about inflation, it will just attract more people to stores like Walmart, which are priced slightly lower so that they can succeed, ”he said. Mali said during the same interview.
However, stocks are at a critical juncture. Mali highlights the “Ascending Triangle” pattern on the charts, where the stock encounters key resistance just above $ 150 and also makes a series of higher lows.
“If they report good earnings and good predictions based on some of these issues we’re talking about, it really will be one of those breakouts that could really push stocks up significantly towards the end of the year,” he said. …
Walmart is due to report earnings on Tuesday. Analysts expect earnings of $ 1.40 per share, up from $ 1.34 per share a year earlier, while sales are expected to be slightly higher year-on-year.
Disclosure: New Street Advisors owns TGT.
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