Profit Pregame

What I’ll Be Buying Instead of Those Retail Stocks Riding the “Vaccine High”

The vaccine effect…

There’s one sector thriving from the recent news.

What’s happening?

It is looking increasingly likely the world will see a Covid-19 vaccine sooner rather than later. And this is rekindling the hopes of a sooner-than-anticipated economic recovery as many felt as if the vaccine wouldn’t come out until later next year. But with the recent news of a 90% success rate for the Pfizer Covid-19 vaccine, hope is at an all-time high.

And there’s one sector that is already climbing thanks to the positive energy flowing through consumers right now – the retail industry. This makes sense seeing that with a vaccine in place, foot traffic could return to retail locations, especially right before the holiday season with consumers itching for some sense of normalcy.

But it’s important to ask yourself if you believe the retail sector will ever see “normalcy “again after consumers have become comfortable with the online shopping process. But investors seem to have some confidence…

Where’s the money?

When you look at the industry as a whole, the SPDR S&P Retail ETF, which tracks the retail sector’s performance, rose 1.2%. And it wasn’t alone; individual stocks jumped up as well on the news. For example, Ulta has gained nearly 23.5% this week.

PVH has jumped more than 21.5%, Guess has climbed nearly 14%, Levi is more than 11% higher, and Tapestry, which happens to be Coach’s parent company, has gained about 7%. And even struggling department stores like Kohl’s (KSS), Macy’s (M), and Nordstrom (JWN) – which have been heavily impacted by the pandemic – were each up nearly 20%.

This is a rally like we haven’t seen in the retail sector in months, and it’s exciting, no doubt. But you have to question if these impressive gains are ones that can stick around or just emotional traders making emotional decisions. And here’s what I have to say…

How do I get some?

When it comes to investing in retail, I’m actually not interested in how much stocks jump after positive vaccine news. Instead, I’ll focus on what I’ve been focusing on for a while: companies that have been funneling resources into the e-commerce section of their business. Even with a vaccine, I believe that the luxury of shopping from home will still win, and I also think we’ll continue to see empty malls and stores – even into the holiday season.

And that’s why I’m putting my money into the most prominent e-commerce leader of them all – Amazon. Amazon has continued to dominate, and I don’t see that changing anytime soon, especially with Amazon gearing up to offer massive holiday deals. On top of investing in AMZN, I’ll also be looking to sell Macy’s. I don’t see this company recovering, and I’ll be looking to cash in on that.

In the spotlight: TikTok news is back…

It’s been a while since we’ve talked about TikTok, the social media video platform, and its ongoing legal battles. But they’ve stepped back into the spotlight. The company is now asking a court to push back the deadline to force the app to be taken off from its parent company Bytedance.

It’s been months of a constant power struggle between the Trump Administration and TikTok. From completely removing the app from the app store to a bidding war – the story of TikTok has been one for the books. And after almost reaching an agreement to sell, the company is not petitioning a federal appeals court to stop the enforcement of an executive order to mandate the sale today.

Now, here’s a quick breakdown of the sale. After a heated bidding war, TikTok agreed (and Trump accepted) a deal for TikTok to become a new global company headquartered in the United States, with Oracle (ORCL) and Walmart (WMT) serving as partial owners.

But it seems like TikTok feels like the impending” Sell by “date violates the app’s due process rights. TikTok also explained that it had offered detailed solutions to finalize the agreement, but everything has been tied up. Now, we have seen two separate judicial orders delay the TikTok deal – so, I’ll be interested to see what comes of this latest move by TikTok, and I’ll be sure to keep you updated.

While We Wait on More TikTok Developments…

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