The migration from brick and mortar to online sales continues to create to create significant challenges for many in the retail industry. The back-to-school sales and holiday shopping seasons were quite disappointing for retailers like Best Buy (BBY), Kohl's (KSS) and Sears Holdings (SHLD) among other well-known retail names. The $1,000 per capita energy "tax cut" resulting from the collapse of oil and natural gas prices was another blow for retailers.
However, with job and wage growth continuing to improve slowly and energy prices seemingly destined to remain very low at least through 2016; there are some good values in the sector. Also, the domestic names are largely immune from the anemic global economy and the strong dollar. In fact, given a lot of retailers source materials and apparel from overseas; they are a primary beneficiary of a strengthened greenback.
In this report, we will highlight one of my favorite “under the radar” plays in the retail space, Sequential Brands (SQBG). This company is very misunderstood, and its recent decline by over 60% is unwarranted.
Sequential just reported blowout quarterly earnings and projects a tremendous year of growth. I sincerely doubt the shares will remain at an oversold $7.00 a piece for much longer.