June 12, 2017

Macy's Stock - Buy Low Sell High

Retail stocks got thumped last week as Wall Street weighed sluggish results from a couple of department store operators. Macy's (M) crashed 16% to its lowest level since 2011 after reporting another quarter of disappointing sales. Group peer Kohl's (KSS) also sold off on earnings, slumping 6%. Nordstrom (JWN) reports after the close. Shares were down 7% ahead of the results.

The selling wasn't just limited to department store operators as about half of the day's worst performing industry groups were in the retail sector. 

Buy Low Sell High 

Doug Kass is now looking to get Long of Macy's. According to TheStreet,
"I am now a more aggressive buyer of M.
I believe at the current valuation that reward vs. risk has turned favorable and there are several possibilities that something positive may happen to the stock.
There are, quite simply, too many assets and too much cash flow. A leveraged buyout transaction also would include a high margin of safety."

Macy's is however still a profitable business and could do very well in the future. According to Macy's CFO "Macy's is highly profitable (18% return on investment) and has a lot of cash flow ($2.7 billion on a 12-month trailing EBITD)."

via www.thestreet.com/story/14167767/3/could-it-be-magic-macy-s-just-may-lead-a-parade-in-retail.html