Why Are Retail Stocks Attracting Investor Interest?

It’s been a brutal 2014 for those holding stock in retail.

According to CNBC, some of the worst performing stocks on the market right now are in retail.  Coach leads the underperforming pack, down 39 percent from last year, while Amazon, Whole Foods, Best Buy and Bed Bath & Beyond, have all been hit by stock price declines of 20 percent or more.  The S&P 500 Textiles, Apparel and Luxury Goods Index has declined 5 percent after growing by 36 percent in 2013, and  the S&P 500 consumer discretionary sector index is almost entirely stagnant, even though it grew by 37 percent last year.

With so much doom and gloom in the retail market, there is only one obvious choice or some investors—buy immediately.

“It’s not just how it does this quarter. We have a three- to five-year time horizon. That’s what we’re really interested in,” said John Apruzzese, Chief Investment Officer at Evercore Wealth Management.

Apruzzese recently made a big bet on Ralph Lauren, whose stock has been trading at 12 months lows.

“That caught our attention,” he said about the share price drop. “We looked at the company and determined that its earnings were intact and it still had growth potential. So it was a very good buying opportunity,” he told CNBC.

Some investors, also bullish on retail, have noted that though retail is down, at least some of those depressed prices may have been weather related and thus are expected to be somewhat reversed as snow is unlikely during this time of year.  Other have urged caution, noting that an overheated stock market may be due for a correction, making it a bad time to buy anything.

 

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