The Capitalist Investor - Episode 52

As of the date of recording this episode, there have been 12.6 million confirmed cases of COVID-19 in the US and 260,000 deaths. So a lot of people are reigning in their holiday plans—which we believe will lead to a significant increase in holiday spending. Black Friday and Cyber Monday were huge days in the past. 42% of consumers started holiday shopping earlier than normal because there’s nothing else to do. So who might the winners and losers be? In honor of Thanksgiving, this is our Black Friday, Cyber Monday, holiday-shopping season episode of the Capitalist Investor.

Outline of This Episode

  • [2:41] Brick & Mortar retailers
  • [6:09] Best childhood Christmas gift
  • [7:48] The winners and losers of retail
  • [10:13] Nordstrom, Macy’s, & Kohls
  • [12:43] Walmart, Target, Lowes, and Hope Depot
  • [15:10] Under the radar holiday shopping stocks

Nordstrom, Macy’s, & Kohls: adapt or die out

Nordstrom is up 134%. Macy’s is up 84%. They are outperforming off the back of vaccine news. But we don’t see people rushing into Macy’s to buy Christmas gifts. The question becomes: How much is going to happen in Brick & mortar versus eCommerce? How much growth will be realized? By the end of the year, eCommerce will be up 30–35% compared to 2019. 2019 was already up 20% year over year. 2018 was up 22% and in 2017 was up 28%. When you put it in perspective, it’s a huge increase in eCommerce spending. It is not going away. COVID-19 has forced people to become online shoppers.

Which means it’s not looking good for the old school mall-based retailers. Malls have been emptying out for years and the trend will continue. But some retailers are adopting an online presence. Of the three names, Nordstrom has always been my favorite. They have a good app, free shipping and free returns, a great off-price store (Nordstrom Rack) and the customer experience is the best. They’ve also launched an innovative concept: Nordstrom Local. Their core services include online order pickup and return, alterations, gift-wrapping, and much more. It goes to show if you want to stay in the game, you have to adapt and innovate.

Walmart, Target, Lowes, and Home Depot: the clear winners

We expect Walmart, Target, Lowes, and Hope Depot to do everything necessary to continue to adapt to an online presence. These retailers will have a strong holiday season. Target is one of the #1 stores you think about when it comes to Black Friday shopping. Everyone who shops there likes the experience. Between curbside pickup and purchasing Shipt, Target has it together. They’re well-positioned to be the go-to store for someone’s Christmas shopping list. Target and Walmart are approaching Apple status. You’ll need a piece of them in your portfolio for a long time to come.

Under the radar holiday shopping stock: iRobot® & Activision Blizzard

Derek’s pick is iRobot (the creators of Roomba® vacuum cleaners). They’re great—unless you have a dog that poops in the house. Derek believes it is probably one of the best consumer electronic inventions. They’ve become less of a novelty and more useful. It vacuums in perfect lines, can adapt to your schedule or be scheduled, and can even test the strength of your wifi in your house. They’ve even launched a wet-mop version for hardwood floors. Their stock is up 60–70% this year.

I’m going with Activision Blizzard. Why? PS5 and Xbox consoles are sold out. With more lockdowns coming, the demand for video games is not going anywhere. Plus, Activision Blizzard has some of the most successful video games: Call of Duty, World of Warcraft, Overwatch, etc. For those unlucky parents who missed out on the new console, you’ll likely be buying new video games, right?

Derek and I also share what our favorite childhood gifts were in this holiday-shopping episode. Don’t miss it!

Resources & People Mentioned

Connect with Derek Gabrielsen

Connect With Mark Tepper

Send your questions and comments to us at info@SWPConnect.com

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Keep Listening to The Capitalist Investor:
Episode 14:
Positioning Your Portfolio During A Recession, Ep #14
Episode 30:
The “New Normal” Investing Playbook, Ep #30
Episode 46:
Red or Blue, These Stocks are Tried and True, Ep #46
Episode 62:
6 Actionable Lessons for Investors, Ep #62
Episode 78:
7 Ways Biden Plans to Tax American Families (Part 1), Ep #78
Episode 94:
NFTs, Explained (Part II), Ep #94
Episode 15:
Spending Strategies in a Bear Market, Ep #15
Episode 31:
Handicapping the 2020 Election, Ep #31