Costco is one of the most successful companies in the world. The model simply works – with strong member retention and great prices offered to those who pay for the privilege of shopping at Costco. Sadly, the valuation is the poster child for the current situation in equity markets after years of stimulus. Is it so expensive that it is best ignored?
We are the closest we’ve ever come to thinking that Nike is an interesting long position. New CEO Elliott Hill is making all the right noises, although the journey to get Nike back to greatness is going to be difficult and painful. The valuation is starting to offer a decent risk/reward profile, but is patience still required here? And what would the success factors be for the turnaround?
Walmart is the biggest name in retail. They know how to move with the times, with an eCommerce strategy that is starting to really blossom. The market loves what it sees, with Walmart trading at much higher multiples than its long-term averages. Then again, when delivering growth with such consistency, where is the limit for this valuation? And is there a pairs trade in this sector as well?
Disney is looking healthier these days and the share price has responded positively. Aside from improvements in streaming, they've had two major box office hits in 2024 - is this the dawn of a new creative era at Disney, or will the old mistakes slip back in?
Market rotations tell us a great deal about sentiment and the positioning of institutional portfolios. What can we learn from this and what might it indicate about potential future gains?
Nike is a company that we’ve been bearish on since we first covered it at Magic Markets Premium. We previously said: just don’t do it, and we were proven right. Things seem to be going from bad to worse, with a change in management and guidance withdrawn for the 2025 financial year. Is there a reason to believe in the swoosh again, or is it still a red X from us?
McDonald’s has historically been the leader in selling a cheap burger and preparing it quickly. There’s no shortage of competition these days and those competitors seem to have closed the value gap, leaving McDonald’s in a tricky situation where it needs to fight hard to maintain its leadership. Will shareholders be smiling, or is the iconic Grimace mascot more appropriate?
Ulta Beauty is a specialist cosmetics retailer that has attracted the eye of Berkshire Hathaway. If the Oracle of Omaha likes it, does that mean that we should as well? It may not be that simple, with a tough competitive environment that is putting Ulta's margins under significant pressure. Does the current valuation reflect that?
Ulta Beauty is a specialist cosmetics retailer that has attracted the eye of Berkshire Hathaway. If the Oracle of Omaha likes it, does that mean that we should as well? It may not be that simple, with a tough competitive environment that is putting Ulta's margins under significant pressure. Does the current valuation reflect that?
Target is the retailer that has been left behind, with Walmart and Costco enjoying a massive uplift in multiples and Target experiencing only modest share price gains that haven’t beaten the index. Part of this is because of a lack of moat and some brand confusion, with Target pushing a value strategy on one hand and yet a more upmarket feel than Walmart on the other. With sales growth having stagnated but earnings on the up, is there an opportunity here for Target as the forgotten retailer?
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