4 Retailers to Sell While You Still Can

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The first full trading week of 2014 was a disaster for retailers specializing in consumer electronics. Niche leader Best Buy (NYSE: BBY  ) surrendered 7% of its value last week, and it was the lucky one. Conn's (NASDAQ: CONN  ) slipped 9%, with RadioShack (NYSE: RSHCQ  ) and hhgregg (NYSE: HGG  ) plunging 20% and 22%, respectively, on the week.

It was the biggest loser of the week -- hhgregg -- that triggered the industrywide sell-off. The 228-store chain offered up a shocking preliminary read of its holiday quarter. It sees revenue for the fiscal third quarter plunging 11.6% to $707.1 million, fueled primarily by an 11.2% slide in comps.

It's actually even uglier than that on the consumer electronics side, since hhgregg experienced positive results with its appliances and home products. Comps for its consumer electronics plunged 19.7%, with computing and wireless falling by an even crueler 24.5%.

Consumer electronics and wireless happen to be the bulk of RadioShack's business, so it's easy to see why those investors bolted on hhgregg's news. Conn's and Best Buy toil in the same areas where hhgregg experienced strength, but if the housing boom wasn't enough to save hhgregg, it's not likely to bail out Conn's or Best Buy. 

The sell-off comes after a highly rewarding year for investors who took a chance on these retailers. Best Buy's stock more than tripled last year. Conn's more than doubled, and hhgregg nearly doubled. RadioShack was the relative laggard of the bunch with its mere 23% ascent -- and the bad news there is that it's now exactly where it was at the end of 2012.


Last year's rally was clearly too ambitious. Best Buy has made great strides in its turnaround efforts, but analysts still see sales and earnings per share declining in the fiscal year that ends later this month. Why the heck did the stock climb 237% in 2013? 

Conn's is the only retailer of the four that's growing. The other three are all eyeing declines on both ends of the income statement for the fiscal year that either ended last month or will be ending this month.

In retrospect, RadioShack had no business moving higher last year. Sales continue to plunge, and losses continue to widen. Even closing out last week's dive at $2.12 -- rubbing out its 2013 gains to the penny -- is too generous. 

Conn's, and to a lesser extent hhgregg and Best Buy, will hold up with their strong appliance and home products, but there's a problem that needs to be addressed as folks buy wireless products directly from carriers and PCs, TVs, and other consumer electronic staples continue to lose their appeal for brick-and-mortar shoppers.

Last year was a great time to invest in these chains. It's not likely to be a repeat performance in 2014.

Invest in retail the right way
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 13, 2014, at 2:45 PM, mistacy wrote:

    No surprise here.

    All those stocks have traded up last year on speculation.

    They are all due for major pull back.

    BBY target $20

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2792637, ~/Articles/ArticleHandler.aspx, 8/27/2015 3:26:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

Today's Market

updated Moments ago Sponsored by:
DOW 16,413.18 127.67 0.78%
S&P 500 1,954.18 13.67 0.70%
NASD 4,746.29 48.76 1.04%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:10 PM
BBY $35.30 Up +0.05 +0.14%
Best Buy CAPS Rating: *
CONN $29.80 Down -0.47 -1.55%
Conn's, Inc. CAPS Rating: **
HGG $4.80 Up +0.34 +7.62%
hhgregg CAPS Rating: *
RSHCQ $0.13 Up +0.02 +0.00%
RadioShack CAPS Rating: *