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2007 Will Be Huge for Retail

By Stansberry Research Interview Series
Friday, December 22, 2006

I believe 2007 will be a huge year for retail.
 
These past 12 months were, by all counts, blockbuster for the retail sector. According to Thomson Financial, same-store retail sales grew at a monthly average of 3.7% year over year. When you take Wal-Mart out of the mix, it’s 4.7%.
 
Thomson forecasts 2007 will be no different, anticipating same-store sales growth of 3%-3.5%. Corporate insiders are certainly banking on it.
 
In 2006, there were 63 retail companies with insider buying. Altogether, corporate insiders at retail companies bought $137 million worth of stock in 2006. Practically any retailer you can name had plenty of insider buying. Some of the better known are:
 
Federated Department Stores
Circuit City
Nordstrom
Radioshack
Limited Brands
Walgreens
Kohl’s
Williams Sonoma
Saks  
 
Now, I love seeing insiders buy their own stock. But I love seeing the world’s best investors move into a particular sector even more. And the legends are investing in retail by the truckload.
 
See for yourself:
 
Legend
Retailers in Portfolio
Holdings
Warren Buffett
Wal-Mart
$855 million
 
Nike
$400 million
 
Costco
$260 million
George Soros
Target
$39 million
 
JC Penney
$21 million
 
Kohl’s
$20 million
 
GameStop
$20 million
Joel Greenblatt
Wal-Mart
$19 million
 
Aeropostale
$18 million
 
AutoZone
$2.5 million

You probably know the world’s richest professional investor, Warren Buffett. Well, George Soros is one of the world’s richest speculators. Joel Greenblatt has made his investors a near-unbelievable annual average of 40% for 20 years. If you haven’t read his latest book, I encourage you to add it to your reading list for 2007.
 
Despite all the talk of a slowing economy brought about by a housing crash, neither the guys running the companies, nor the ones who have made fortunes investing in publicly traded companies seem to believe it.
 
And as the last 15 years have shown us, few things are as consistent as Joe America’s determination to spend money he shouldn’t on things he doesn’t need.
 
If you haven’t looked at retail stocks already, now is the time. You won’t hear about the sector from Wall Street until the big gains have already been made.
 
Good trading,
 
Graham




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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1223.75 +0.1% +10.9%
Oil 37.80 -1.1% +0.8%
Gold 136.50 -1.9% +20.7%
Silver 28.08 -4.9% +57.6%
US-Dollar 79.65 +0.6% +5.2%
Euro 1.33 -0.3% -10.5%
Volatility 17.99 -0.2% -18.6%
Gold Stocks 576.48 -2.5% +25.0%
10-Year Yield 3.16 +7.5% -8.4%

World ETFs
Symbol Price
Change
52-Wk
USA 122.83 +0.1% +10.8%
Canada 30.41 -0.5% +17.1%
Russia 22.00 +0.1% +18.9%
India 38.15 +0.6% +22.5%
Israel 16.92 +1.0% +11.2%
Japan 10.56 -1.2% +6.6%
Singapore 13.66 -0.4% +18.6%
Taiwan 14.87 -0.3% +19.0%
S. Korea 57.35 +0.3% +21.8%
S. Africa 71.15 -1.5% +28.2%
China 43.99 +0.3% -1.5%
Lat.America 52.69 -1.0% +8.5%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 134.90 -2.1% +18.0%
Big Pharma 64.04 +0.1% -2.8%
Internet 72.89 +0.4% +27.4%
Semis 16.25 +0.4% +26.6%
Utilities 30.98 -0.7% +0.2%
Defense 18.55 +0.4% +8.7%
Nanotech 10.16 +0.8% +1.6%
Alt. Energy 10.20 -0.4% -4.6%
Water 18.77 +0.8% +14.5%
Insurance 16.14 +0.4% +19.6%
Biotech 20.65 +0.4% +27.3%
Retail 19.65 +0.3% +27.0%
Software 24.83 +0.7% +24.3%
Big Tech 53.88 +0.1% +22.7%
Construction 13.30 +0.8% +16.2%
Media 13.75 +0.2% +23.7%
Consumer Svcs 67.43 +0.1% +23.1%
Financials 54.95 -0.1% +7.0%
Health Care 63.89 0.0% +1.3%
Industrials 63.79 +0.4% +19.8%
Basic Mat 74.54 -0.1% +27.5%
Real Estate 55.53 +0.3% +24.4%
Transportation 91.65 +0.3% +25.1%
Telecom 22.69 +0.2% +14.6%