The Latest Updates on the 'Death of Retail'
Why Wal-Mart shares could soar... The latest updates on the 'death of retail'... Shopify continues its red-hot year... One brick-and-mortar retailer is bucking the trend...
One retail titan is set to skyrocket...
In a retail environment where consumers are increasingly shopping online, one traditional retailer is not only surviving... it's thriving.
As our colleague and True Wealth senior analyst Brett Eversole recently noted, discount retailer Wal-Mart (WMT) recently closed higher for 11 consecutive days... a feat it has only accomplished 12 other times since 1973. And if history is any indicator, shares could rise more than 40% over the next year. As Brett explained in yesterday's edition of our free DailyWealth e-letter...
Since 1973, when Wal-Mart's stock moved higher for 11 straight days, it has typically gone on to rally an average of 41% over the next year.
I know it's a bold claim. It sounds crazy to say it... But history says Wal-Mart has a legitimate shot at huge gains over the next year. And 41% gains are in no way out of the question.
Rather than suffering from disappearing foot traffic like many of its peers, Wal-Mart is seeing a healthy uptick in its online sales.
Last month, the company posted impressive second-quarter earnings that topped analyst expectations as it focused on improving product selection and investing in its digital segment. Wal-Mart posted adjusted earnings of $1.08 per share on revenue of $123.4 billion, beating estimates of $1.07 per share on $122.8 billion. And while same-store sales – an important metric for traditional retailers – rose 2% over the same period a year ago, the real standout number came from its online sales, which grew 60%.
Wal-Mart is doing everything it can to compete with online retail giant Amazon (AMZN). Last year, Wal-Mart purchased competitor Jet.com for $3.3 billion, and its online sales have been on a tear ever since.
Meanwhile, Wal-Mart's peers continue to struggle...
Wal-Mart's massive market share means it can quickly adjust to changing consumer habits. But regular Stansberry Digest readers know that many other traditional retailers don't have that luxury. As Porter explained in the August 18 Digest...
My top, most certain trend is the death of retail. I have no doubt that within 10 years, more than half of the retail space in America will no longer exist. And that's probably too conservative an estimate. The destruction in retail is likely to be far worse and occur far faster, like a 75% decline within five years...
We buy everything – groceries, clothes, cars, toys, tools, services – absolutely everything online. I won't go into stores anymore. Not even for a pack of gum. Wegmans will bring me gum along with all my groceries within hours, and the workers stack them all neatly for me in my garage. They even put the food and drinks into my fridge for me.
The rest of the country is right behind me, walking away from the mall and from Target (TGT), too. Nevertheless, most people don't understand just how big of a change this will be for the U.S. economy.
Indeed, as e-commerce sales rose 11% from May to June, brick-and-mortar retail sales fell 4%, according to U.S. Commerce Department data. And traditional retailers – especially those located primarily in shopping malls – are closing at a rapid clip. This year's victims include BCBG, Gymboree, hhgregg, The Limited, and Wet Seal. Others, like Sears (SHLD), have begun hinting they may also succumb to the changing landscape.
One company benefiting from the 'death of retail'...
As folks continue to buy more goods online, small business owners are taking notice. And more and more of them are turning to Canadian e-commerce firm Shopify (SHOP), a longtime Stansberry's Investment Advisory holding. Porter recommended shares in April 2016, and they've been on a tear ever since.
Hundreds of thousands of entrepreneurs have launched businesses on Shopify. The company's third-party developers have created more than 1,800 apps, drawing in 7 million downloads. As news service Bloomberg recently reported...
Over the years, an entire ecosystem has grown up around Shopify, much like the one enveloping Amazon. Groups and forums on Facebook and Reddit are dedicated to the arcana of search engine optimization and conversion rates. Developers around the world have built hundreds of applications that merchants can add to their stores, from shoe size converters to supply-chain management tools.
And, of course, a cottage industry of consultants has sprung up to advise neophytes how best to sell online. In 2013, Ross Beyeler pivoted his Boston-based web design agency Growth Spark to focus almost exclusively on helping Shopify merchants. Since then he's increased his staff from four to 12 and won customers as big as headphone maker Bose. To Beyeler, the pool of 500,000 potential customers can only keep growing. "The demand for Shopify is just so enormous," he says.
Small business owners have grown to love Shopify's services. It charges at least $29 per month for its services and takes a small cut of transactions through fees. The more transactions for the business owner, the more money Shopify makes.
Longtime Digest readers know that Porter is bullish on the stock. In fact, he hosts his OneBlade razor company using Shopify's software. As Porter explained in his original recommendation...
What we love about Shopify's business model is its scalability.
The more merchants that use Shopify's software each month, the more subscription revenue it earns while adding very little cost. And the more that each merchant sells, the more money Shopify makes. This double-barreled revenue stream makes Shopify's growth potential massive.
Shopify's interests are completely aligned with its customers'. As merchants succeed, Shopify succeeds. And satisfied customers aren't likely to switch to competitors. Once a merchant begins using its software, and as long as it stays in business, Shopify locks in a reliable source of ongoing subscription revenue.
Today, Shopify boasts more than half a million customers, including larger companies like Red Bull, Reddit, Tesla (TSLA), and Procter & Gamble (PG). It also does business with major merchants like Visa (V), New York Times (NYT), Frito-Lay, and BuzzFeed.
Shopify shares hit an all-time high last week. Stansberry's Investment Advisory subscribers who followed Porter's advice have more than doubled their money on the trade.
Is this traditional retailer the next Shopify?
In the September issue of Stansberry's Investment Advisory – out last Friday after market close – Porter and his team of analysts explained a powerful signal they recently uncovered... and how it's setting one stock up for big gains as most equity investors slowly figure out what they already know.
The stock is one of the most recognizable brands in the world... but many investors have dumped it, assuming it will be one more victim in the death of retail.
Yet the indicator Porter and his team found says the stock is a "buy" today. This signal happens occasionally to individual companies... And when it does, it sends their stocks soaring.
Back in 2011, a buy signal flashed on appliance maker Whirlpool (WHR) before shares spiked 244% over the next two years. It flashed in 2009 on makeup firm Estée Lauder (EL) and energy firm Pioneer Natural Resources (PXD), sending shares up 365% and 705%, respectively. It flashed in 2012 on video game maker Electronic Arts (EA), sending shares up 229% in two years.
And today, it's telling us to buy a cash-generating machine with one of the most valuable consumer brands in the world. In fact, during the financial crisis of 2008 and 2009, this company was generating a record amount of cash.
But today, the market has tossed this elite brand into the scrap heap alongside troubled retailers like bankrupt shoe chain Payless as well as traditional mall anchors like Macy's (M).
Now, the company is trading at nearly its cheapest level ever... And Porter believes it's a double in waiting. Best of all, you can access this recommendation – and all of Porter's premium research – 100% RISK-FREE for the next 30 days. Get started here.
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Regards,
Justin Brill and Rebecca McClay
Baltimore, Maryland
September 6, 2017