[Note: this post originally appeared on the CFA Institute’s Enterprising Investor blog.]
Many retailers enjoyed a cheerful holiday season. November sales figures handily beat analysts’ expectations, rising nearly 5% year-over-year (YOY), and lower gas prices and an improving economy drove strong results in December as well. Investors looking to capitalize on these glad tidings might be tempted to consider some of the bargain stocks in the sector, especially those that have faltered in recent years, such as JC Penney (JCP) and Sears (SHLD), or even deeply troubled firms, such as RadioShack (RSH) and Wet Seal (WTSL).
Not to play the Grinch, but history suggests this would be a terrible idea.