What happened
This past week's been a good one for the broad market, but a great one for certain consumer-facing stocks. Bed Bath & Beyond (BBBY) is soaring, up 9.6% as of midday Friday, while shares of retailer Express (EXPR) are up an incredible 62.2% for the same period. Little-known beverage name Celsius Holdings (CELH -2.81%) is higher to the tune of 8.8%.
The bullishness reflects a converging combination of factors.
So what
Investors following the meme stock movement may already realize Express and Bed Bath & Beyond were both hot topics on trading message boards -- again -- last week. And at least in the case of Bed Bath & Beyond, the company gave traders plenty of fodder. A little over a week ago, the home goods retailer unveiled the "Beyond Big Savings Event" meant to make its stores a top destination for consumers shopping with summer and travel in mind. Earlier this week, Bed Bath & Beyond unveiled its newest private label brand, Wild Sage. The new brand of bedding, bath, and linens marks the company's fifth new house brand launch this year alone, with a total of eight (at least) planned for 2021.
Image source: Getty Images.
Apparel retailer Express didn't make any announcements that would have explicitly sparked such a bounce, but the clothing industry itself is being reinvigorated by a return to pre-pandemic norms. Investment analysts with Bank of America report sales at clothing stores for the week ending June 19 were 36% higher than for the same week in 2019, while sales at department stores were up 16% for the same period.Activist investment outfit Macellum Capital Management's chief CEO Jonathan Duskin -- who largely prompted Bed Bath & Beyond's current turnaround -- also believes apparel retailers are coming out of the pandemic's lull in a position to generate above-average growth for the next two to four years.
It should be noted, however, that steep sell-offs from each of these names two weeks ago is the crux of this week's outsize gains from each.
This is particularly the case with Celsius Holdings, which hasn't delivered any official corporate news since announcing a little over two weeks ago that it would be selling newly issued shares of the company. The fitness beverage company is capitalizing on its stock's 600% gain over the course of the past 12 months, and news of the dilutive action shaved around 20% off the stock's peak price from earlier this month. Celsius' double-digit sales and earnings growth (past and projected)rekindled the uptrend this week despite the recent injection of newly issued shares into the float.
In all three cases, recognize the bigger theme: The economy's slow roll back to pre-COVID normalcy is the key prod for these gains.
Now what
It's tricky. Most investors innately know that meme stocks are unpredictable, as their outsize gains tend to be somewhat artificial and therefore don't last. While Celsius Holdings is less of a meme stock and more of a conventional pick, its triple-digit rally and subsequent valuation -- shares are now trading at 35 times its trailing-12-month revenue and nearly 640 times its trailing-12-month earnings -- make it a tough ticker to handicap as well.
For active stock speculators, though, the underpinnings of this broad bullishness are the real deal. That's the reopening narrative. The ongoing resumption of consumerism at least somewhat resembles the pre-coronavirus environment. Most states are now fully reopened, with most also already ending mask mandates. Just plan on continued volatility, prompted by profit takers and naysayers who may have an incentive to prevent these stocks from making any further bullish progress.
