Bed Bath & Beyond

(Top Pick Jun 13/16, Down 6.70%) They are trying to reduce their physical footprint and increase on-line sales. It is a hold for her. It is a matter of just being able to make more sales online. She thinks they will recover. They just aren’t able to increase their margins. They need to not offer so many in store discounts.

(A Top Pick June 13/16. Up 7.61%.) This is really a reflection of what we have been seeing in the past couple of months, a stronger US consumer and stronger housing sales. Also, they have finally got their online sales a little more together.

Retail overall has been really, really tough. It has been very segmented into winners and losers. The tough part for this company is what a lot of the more traditional department store types are seeing. They are not getting the differentiation and are having issues with traffic. Stuff they are working on hasn’t really panned out a lot.

US housing sales are really ramping up. Consumer discretionary, especially the retail stocks, have really been beaten up, and this is trading at a good valuation. However, the key thing is that they need to have great online sales. This company got into the online game late, and are the turnaround story. We have just started seeing a ramp up in better online sales, but it is only trading at 9X earnings. Super cheap.

(A Top Pick April 18/13. Down 8.16%.) This worked for him for about 6 months and then completely imploded. Not sure if there has been a seismic shift in retail. Fundamentals are very reasonable. Trading at 12X earnings and the balance sheet is completely clean. They are buying back stock instead of starting a dividend.

(A Top Pick April 18/13. Up 1.46%.) Missed their earnings. Had to close stores. However, the thesis has not changed. He does not sell stocks based on one bad quarter. A wonderful company that generates a lot of free cash flow. Bought back $1 billion worth of stock last year and he thinks this is going to continue.

Stock came off last year because the market was concerned about its risk with Amazon, however it is buying back shares. Bought $1 billion worth of shares in 2013. Reducing its share count hand over fist. Clean balance sheet with $5 net in cash. Opening more stores and there is room to grow outside of the US and Canada. It will benefit from the resurgence in the US housing market.

Had a big drop off after reporting poor earnings. Technically it seems to be having support right around its current levels. Looks like it is going to be holding in at around the $60 level. Seasonably, it tends to reach a very important low right around the end of October and then does well up to around Christmas.