Playing Sporting Good Stocks

Retail is a barometer of economic activity if retail is rising it means people are out spending which reinforces our economic cycle, and the next 4 months are the most active retail months of the year.  Kids are going back to school,college sports gets into full swing, and pro sports are not far behind.  This all very good for retail stocks especially sporting goods like Dicks Sporting Goods (DKS) and Cabellas (CAB).

The retail sector has seen strength going into the fall season in fact the most recent monthly retail sale report was far better than expected up .8% in July.



This is an encouraging sign if you are looking to trade the retail sector, especially sporting good stocks like Dicks Sporting Goods and Cabella's.  Both stocks are very active in the fall Dicks caters more to the sports enthusiast and Cabella's the outdoorsman perfect companies to trade in the fall.

These 2 particular stocks have done particularly well over the last 3 years, both are in 3 year uptrend Dick's is up 151% and Cabella's is up 191% since September 2010.

 

Dicks Sporting Goods (DKS)

Dicks Q4 earning are expected to jump from .76 last year  to 1.07 this year a 40% increase.  Analyst also show that the 2012  Q3 to Q4 earnings will grow 189%.  Current ROE is at 16%.  

The chart shows that when Dicks drops, usually through the summer months, but when the retail buying season hits BOOM!  From September to December 2010 it rose 53% and then during the same period of time last year it went up 30%.  Right now it has good earnings power at its back and it has just come out of a small correction and maybe poised to move.



Cabella's (CAB)

Cabella's is in a similar situation very strong company in the 3rd and 4th quarters.  Earnings are expected grow 18% in the 3rd quarter over last year and 15% in the 4th, but the quarter over quarter growth rate is expected to be 106%

CAB in 2010 saw a 60% rise in price from Sept - Dec and then a 30% rise in 2011.  What I really like about Cabella's chart is that it has created a good base and then advanced every time and now we can see the same thing happening.  With retails sales surging in July, going into the fall we might expect more of the same growth.



The growth of the retail sector is very encouraging and these are stocks that are in a position to capitalize on any upward movement in the retail sector as well as on the strength of their sales and earnings.

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Disclaimer: This article is intended to be informative and does not constitute a buy, hold, or sell recommendation., and should not be construed as personalized advice as it does not take into account your specific situation or objective