According to the U.S. Commerce
Department, the fourth quarter of 2008
marked the worst retail shopping season
since at least the 1970s. But few would
guess that the best performer in the
Dow last year was actually a
retailer. Who was it?
A.) Big Lots (BIG)
B.) Wal-Mart Stores (WMT)
C.) TJX Companies (TJX)
D.) Williams-Sonoma (WSM)
E.) Limited Brands (LTD)
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Published:
February 4, 2009
The
correct answer is 
(B.) Wal-Mart Stores (WMT)
Given the gloomy economic
environment, many investors would
guess that the best performers were
companies in traditionally defensive
industries such as healthcare or the
food industry. But that wasn't the
case in 2008. Dow components Kraft
Foods (NYSE: KFT) and Johnson &
Johnson (NYSE: JNJ), considered two
of the most defensive names in the
Dow, fell -18% and -10%,
respectively. Few would guess that
the best performer in the Dow last
year was a retailer --
Wal-Mart Stores (NYSE: WMT) returned +19.5%.
In a conference call last year,
Wal-Mart commented that it actually
saw a shift in its customer base;
the credit quality and average
income level of its shoppers
appeared to increase. The reason is
simple: Some shoppers who might
normally buy their groceries and
household goods elsewhere switched
to Wal-Mart to save money.
It's proof that a negative retail
environment isn't bad news for all
retailers. When the economy slows
sharply, consumers don't stop
spending entirely but they do shift
their consumption habits. This is
particularly true in this economic
cycle. Strong growth in incomes for
workers in the financial services
industry has been a boon to luxury
retailers in recent years; but banks
and brokers were among the hardest
hit in the recent contraction,
destroying demand.
Even as consumers cut spending on
expensive items and premium brands,
they still need basic apparel,
household goods and groceries. These
basic staple items are the province
of the discount retailers, and
spending at such stores actually
tends to accelerate in uncertain
economic times.
With these points in mind,
StreetAuthority editor Paul Tracy has picked through the
proverbial clearance bin to find
retailers that are thriving in this
market and giving investors
something to cheer about. In the
latest issue of his
Market Advisor
newsletter, Paul takes an in-depth look at
today's retail environment and
provides insight into nine
discounters that have rallied more
than +20% in 2008, year compared to
a -32% decline for the S&P Retail
Index! To learn the names of these
stocks, and to learn more about
Market Advisor,
please visit this link.
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The Next 433 Banks That Could Fail
There are 7,932 banks in the United
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If you have cash in any of
these banks your savings could be at
risk.
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