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The Contrarian Investor Podcast Posts

Contrarian Calls, Revisited: Value Stock Geek’s Bullish Take on Certain Retail Stocks

Value Stock Geek, well known by his Twitter handle @ValueStockGeek, was bullish on shares of certain retail companies.

Speaking on the podcast in June 2019, the guest said E-Commerce had not yet destroyed old-fashioned retail commerce. “The retail sector is now a hated and beaten-up sector and it’s mainly because of Amazon and E-commerce,” he said at the time. “But I think the current narrative is overblown…right now, E-Commerce as a percentage of retail sales represents about 10% of all retail sales. That means that 90% of all retail transactions still happen in the store.”

Value Stock Geek’s favorite stocks were Dick’s Sporting Goods (NYSE: DSK) and Urban Outfitters (NASDAQ: URBN).

What Happened

Both stocks outperformed the SPDR S&P Retail ETF (XRT) through the end of the year and into the first month of 2020. Then COVID-19 hit. There was no way for ValueStockGeek (or anybody else) to predict the pandemic, much less what it ended up doing to the retail sector. After these stocks sold off dramatically along with the rest of the market there has been a rebound, with DKS outperforming the XRT index. As the chart below illustrates, DKS shares are up more than 70% since last June, compared to a gain of about 18% for the XRT. URBN shares have not done as well.

“Obviously I never could have anticipated that we would have a nationwide lockdown when people can’t actually go to retail stores,” Value Stock Geek said when he was asked about this call on a return visit to the podcast. Still, he continues to hold DKS, which has benefited since COVID as consumers have been doing more camping and purchasing at-home exercise equipment.

“Urban Outfitters went through a really rough period. I ended up selling,” he said. “Retail continues to be an area of the economy that’s under siege.” Stocks will continue to trade at low multiples that will draw down with the rest of the retail sector. “But if you pick your stocks you can find value in there. I’d say Dick’s was a pretty good example.”

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Season 2, Episode 28: Economic Growth Prospects Are Better Than Advertised

Alex Chausovsky of ITR Economics discusses the metrics pointing to continued recovery from COVID

Alex Chausovsky of ITR Economics joins the podcast to discuss his view that economic recovery in the U.S. is on firmer footing than widely believed.

Content

  • Downside risks do exist. Flu season is approaching but the data is painting a more encouraging picture (3:37);
  • The top leading indicators are predicting a business cycle rise in 2021, led by the consumer (6:17);
  • Employment is a lagging indicator. Other metrics are more telling about the economy’s future prospects (9:53);
  • The election and how that might impact things (11:50);
  • Background on the guest (18:31);
  • The prospects for commercial real estate. Is the office doomed? (30:34)
  • Current opportunities: Look to the defense sector and export-intensive industries in the U.S. (34:44);
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Season 2, Episode 27: The ‘Weird Portfolio’ With Value Stock Geek

Adding gold and real estate exposure to the traditional portfolio construction mix.

Value Stock Geek, well known on the Twittersphere as @ValueStockGeek, joins the podcast to discuss his concept of the “weird portfolio.”

This portfolio allocates to gold and real estate as well as stocks and Treasuries.

The guest also revisits his prediction from his first visit to the podcast last year, when he said retail stocks were undervalued.

The paper explaining this concept in more detail can be read in its entirety here.

 

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