Revealing the Most-Watched Retailer

With economic uncertainty still in the air, some retailers find themselves poised to profit from changing customer habit and an eventual recovery while others teeter on the verge of collapse. That makes the retail industry among the most-watched by investors, and now we're able to determine the individual retailers that are garnering the most attention.

People watch stocks for different reasons -- they're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless of their motivation, we can take several steps toward understanding market sentiment by seeing who's watching what. With the Fool's free My Watchlist service now 3 months old, we have tens of thousands of people telling us the businesses that have, for whatever reason, piqued their interest.

Looking at the aggregate data, we can see that Costco Wholesale (Nasdaq: COST  ) is the runaway leader in terms of watch interest, the percentage of people keeping an eye on the retail industry in general who are specifically watching each company. As Fool analyst Alyce Lomax recently wrote, "The warehouse experience goes way beyond fluorescent lights and concrete floors; at Costco, it's good business. Costco customers fall in love with the company's bulk deals, and the company does great things for its employees. Jim Sinegal is building this company for the long term, and this is most certainly not a company to think about on a quarter-by-quarter basis."

Here are some of the most-watched retailers with their watch interest along with the stocks' CAPS rating (out of five possible stars) to show the sentiment of our free investing community.

Company

Market Cap
(in millions)

CAPS Rating

Watch Interest

Costco Wholesale

$31,740

****

28.5%

Whole Foods Market (Nasdaq: WFMI  )

$8,599

**

9.0%

hhgregg (NYSE: HGG  )

$851

***

7.3%

Walgreen (NYSE: WAG  )

$36,540

****

1.7%

Target (NYSE: TGT  )

$42,421

***

1.5%

It's easy to see why most of those companies are among the top dozen of the 177 retailers that have been added to a watchlist at least once. Costco, Walgreen, and Target are behemoths. Costco and Whole Foods are media and investor darlings with cult followings for their engaging CEOs. But amid some of the largest, most powerful brands in the world, relatively tiny electronics and appliance retailer hhgregg is a surprise entry.

The company has had a roller-coaster ride of late, and it might be that investors are watching for a good price to get in on what appears to be a growing company. The company came seemingly out of nowhere and now I can't escape it ... and that's by design. As Motley Fool Hidden Gems co-advisor and Motley Fool Stock Advisor associate advisor Andy Cross told me in a recent interview, "Their strategy is to hit a market and hit it big. They opened four stores in the D.C. area about the same time, and they throw tons of ad dollars into this market, leveraging their advertising across the region's stores. They're looking to explode onto the scene."

The stock took a hit recently when competitor Best Buy announced disappointing third-quarter results, dragging down the industry. Best Buy at the time said that it was particularly hurt by discounters such as Costco and Target, which lured away customers by pushing lower-end -- and lower-priced -- flat-screen TVs. As analyst Matt Koppenheffer wrote, "As long as shoppers are watching their wallets and are willing to sacrifice brand name -- and potentially quality -- in favor of price, hhgregg and Best Buy could both face a tough slog. Currently, both companies are continuing to push TVs from manufacturers such as Sony and Samsung, while Wal-Mart and Target are focusing on brands like Vizio, Westinghouse, and Apex. After [hhgregg's 12% drop on Dec. 14], shares don't look particularly expensive, though they don't look particularly cheap either. The business is an interesting up-and-comer, so investors may want to keep an eye on it in case the share price gets more attractive."

And that might be exactly what users of My Watchlist are thinking in making it one of the most-watched retailers. Whether you're hoping for a lower price or waiting to see how the economy recovers, it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, free from the Fool. Click below to start following one of the stocks mentioned above:

Roger Friedman owns shares of Whole Foods. Best Buy and Costco are Motley Fool Inside Value recommendations. Best Buy, Costco, hhgregg, and Whole Foods are Motley Fool Stock Advisor picks. Motley Fool Options has recommended buying calls on Best Buy. The Fool owns shares of Best Buy and Costco. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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