What’s even more inconceivable?
The fact that a few stores where you might shop for holiday gifts are still around for the 2016 holiday season—and they’re even having some great sales.
Sure, get out there and buy some of their products…
But for goodness’ sake, don’t buy any of their stock.
Retail Stocks Still Alive for Christmas
Retailers have had a tough time of it over the last few years.
You can point to several contributing factors, including an ongoing sluggish economy, radical changes in the industry model mostly brought upon by Amazon (NYSE:AMZN), and pricing competition that’s hit the sector extremely hard (see Wal-Mart [NYSE:WMT] for proof).
These three companies have surprised analysts, shareholders and customers by simply staying in business during this period, and they deserve some mention—not to mention perhaps buying something from them—for their efforts.
Their stock, however is another story…
J C Penney (NYSE:JCP)
For those of you who don’t know, the answer to the “JC” is “James Cash” Penney, who founded his eponymous retail store chain over a century ago.
The company became a retail legacy by offering discounted merchandise on a daily basis, along with what seemed like weekly sales events.
That legacy was placed in deep water back in 2012 when the company handed over the reigns to Ron Johnson, an Apple (NASDAQ:AAPL) veteran who thought he knew what loyal JCP customers wanted most: a total change in the Penney’s model.
He was very, VERY badly mistaken.
After changing JCP into a company based on “Fair and Square” pricing—whatever that means—and spending perhaps $100 million doing it, Johnson, and the four executives he brought in for $26 million in bonus money and total compensation packages worth $53 million, were shown the door, but not before the stock was crushed under the weight of expenses, dead sales, and mismanagement…
From a high of just over $42 per share in February 2012, JCP sank like a boulder throughout all of 2012-2013, even after a few rallies to a low of just over $5 per share.
JCP suspended its 20 cents per share quarterly dividend and looked, for all intents and purposes, like a victim of the times.
But surprisingly, the damage inflicted did not completely leave JCP on the scrapheap.
The first wise move was to bring back former CEO Mike Ullman, who understood the JCP culture and customer.
The next move was to get back to a merchandising strategy that worked for the previous century: Focusing on it’s own home-grown brands, including its St. John’s Bay clothing and Arizona brand jeans, along with these stalwarts.
JCP suggested back in 2014 that it would take through 2017 to get back to about $17.3 billion in annual sales, which it hit in fiscal year (January 31) 2012 (it’s all-time high was $19.9 billion in 2014, according to Fortune).
Whether or not JCP can make that $17 billion number is still in doubt.
Fiscal 2015’s $12.25 billion was a 3% rise from 2014, and its quarterly performances to-date leave little to get excited about, with revenues flat in both May 2015 and August 2015 at $8.75 billion.
Oh, and both quarters showed losses…
The stock is hanging in there at just over $9 per share, a 40% year-to-date gain.
JCP stock even made it over $10 per share last week before giving back some of that rally.
Will JCP ever be what it once was both in the retail market and in your portfolio?
Heck no. But it’s still selling merchandise, and that’s something.
Which brings us to the next ex-DOA retailer where you might plunk down some (unexpected) coin over the next few months…
Best Buy (NYSE:BBY)
Best Buy’s troubles also started in 2012, after it had to relieve then-CEO Brian Dunn from his duties due to some unethical conduct with another employee.
That decision was just the tip of the trouble iceberg for Best Buy, as shortly thereafter, founder Richard Schulze resigned after it was discovered he knew about Dunn’s troubles.
That iceberg moment turned into the Titanic as the company began a slow but steady descent as the computer and electronics retailing industry started to eat its own.
Once again, Amazon was at the forefront of the changes, but once Wal-Mart and Target (NYSE:TGT) started to lower prices on all their wares, Best Buy was in deep trouble.
BBY suffered a staggering $1.23 billion loss in fiscal (March 31) 2012 on $50 billion in revenues.
The chaos at the top sent shares that investors had seen top $45 per share in 2011 all the way down to just over $11 per share in late 2012.
What happened next shocked the world a bit, as BBY managed to turn it around and become the top-performing S&P 500 stock for 2013 with a whopping 260% gain.
That party was short-lived as reality hit at the end of 2013 and BBY’s stock price was chopped in half.
What helped them to stay in the game has managed to keep them afloat ever since:
- Hubert Joly moved from Carlson Wagonlit Travel to the CEO’s office at BBY, bringing retail experience.
- BBY plucked Williams-Sonoma (NYSE:WMS) superstar Sharon McCollam as CEO.
- They plugged the leaking vessel with smart “Store-Within-a-Store” strategy to move Samsung (NYSE:SSNLF) and Microsoft (NASDAQ:MSFT) merchandise, and adopted a “Low-Price Guarantee” policy to prevent those pesky show-roomers from walking out after price comparison browsing.
- They also kept the dividend in place. Today, that dividend pays out a very nice 23 cents per share quarterly dividend, and throws off a 2.60% dividend yield.
Can it all last in the face of even more competition out there in technology, electronics, appliances, iPhone, iPad, Surface Tablet and high-def television land?
Net revenues over the past two fiscal (March 31) years have been flat, but cost cutting has managed to improve the bottom line in each of those years, with 2015’s net income a whopping $1.2 billion on $40 billion in revenues.
For a company once considered leaking on all sides, BBY has made a nice comeback. We’ll see about 2016.
In the meantime, here are Best Buy’s top 15 holiday tech gifts for the coming Christmas season.
Don’t be surprised if BBY is still around with an updated list next year, too.
The last of our surprise holiday present suppliers is a smartphone retailer that’s still trying to figure out what it will be when it eventually grows up…
Blackberry (NASDAQ: BBRY)
This Canada-based provider of mobile communications and services lost the smartphone race before it even realized the starting gun had been fired.
Consider that in the early 2000s (heck, even into the mid 2000s), Blackberry, know at the time as Research in Motion, held a very nice position in the growing hand-held mobile market.
As late as 2010, Blackberry still maintained a fairly substantial lead on the corporate side of the mobile operating side ledger, outpacing all comers at the time.
Indeed, “Crackberry” earned its way into the vernacular to describe those Blackberry users tethered to their devices 24/7.
But Blackberry squandered it… and I mean big-time.
While Apple and Google (NASDAQ:GOOG) rocketed ahead with exponential gains in software and hardware design for both corporate and personal users, Blackberry fiddled around the edges.
Where does that leave BBRY today? Just above “others” in the smart phone market share…
As befits what happened to Blackberry’s market position over the decade-plus, its share price lost 88% in 10 years.
However, BBRY continues to plug along, surprisingly still solvent and trading even with its myriad troubles. Why? Several possible reasons…
BBRY is sitting with around $3 billion in cash and equivalents on the balance sheet. That’s plenty of money to use as backup to any losses.
Speaking of losses, while BBRY has lost more than its share over the past three years ($6.5 billion, to be fairly precise), operating cash flows were positive in two of those three years.
BBRY is almost constantly on the end of takeover talk, even if the last serious conversation occurred in 2013.
Lastly, as pointed out by InvestorPlace Editor Jeff Reeves, BBRY does have some valuable software that’s applicable to several of the larger messenger applications providers.
So kudos for Blackberry still hanging around the smartphone space! Everyone left at the company should enjoy the Christmas party this year… you never know when it might be the last one.
There you have our three surprising companies that, much to many, are still around for Christmas shopping in 2015.
Remember: Shop their sales, but do not buy their stock.
Can “One Number” Consistently Hand You Up to 300% Gains? Beat Wall Street to the stocks they want to buy and consistently profit! Watch this short video now.