Diamonds and Dogs

11/17/15

Another day, another retailer trading lower. Dick's Sporting Goods (DKS) is the latest victim down 11% following disappointing earnings and lower fourth quarter guidance. Dicks has stopped the bleeding in its golf business, but unseasonably warm weather has now opened new wounds in cold-weather product sales—notably in its hunting business hurting sales and profits. Dicks has been a stellar stock the last several years, but not this year. The stock has tumbled nearly 40% since the April and 40% of the publically traded retail names are down 10% in just the last month. Let's hope the holiday season is better than expected for Dicks and the rest of the sector.

Home Depot (HD) is the diamond of the day trading at an all-time high thanks to better than expected earnings. One of the few stand outs in the retail space, Home Depot met or beat Wall Street expectations for the sixth consecutive quarter thanks to renewed home building. Housing starts have more than doubled in the last year and house appreciation has allowed consumers to spend money on home improvements once again. It looks like Amazon and Home Depot are carrying the load for the retail sector this quarter.