Here’s how Hightower’s Stephanie Link is playing retail earnings this week
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Investor Stephanie Link is eyeing TJX , Target and Walmart ahead of retail corporate earnings this week. For Link, chief investment strategist and portfolio manager at Hightower, off-price retailer TJX could stand to benefit from extra inventory throughout the retail sector. That’s because the company buys up that inventory, and it has pricing power, she said. In these upcoming quarterly results, lower freight costs could bolster gross margins at TJX. “Any weakness on that name for whatever reason, I’m a buyer of that one,” Link said. But Target, Link said, is a “little bit more dicey” because about 55% of the company’s revenue is derived from discretionary consumer spending. “We know that the grocery piece is fine, and doing well — they have pricing power — but on the flip side the discretionary is under a lot of pressure,” Link said. She added that inventories will be a key focus area, which the investor expects will improve and thus should help the company’s margins. On Walmart, Link forecasted that the company will have a better showing compared to Target, given that the retailer has more business in grocery and has pricing power in that space. “The only thing wrong with Walmart is that it trades at 25 times forward estimates, versus Target at 18 times,” Link said. Target and TJX will report quarterly results before the opening bell on Wednesday, while Walmart reports before the market opens on Thursday.
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