A value investor must look at out of favor sectors in order to find value, and there are few sectors more unloved right now than retail. The American consumer is dead say the pundits, and we must prepare for life without these out of control spenders.
However, the Commerce department reported today that retail trade sales were down 0.1% in February, and January sales were revised to a stronger increase of 1.8%. Is it time to hunt for bargains in this sector? I found a list of cash rich companies and noticed three retailers on it –
Foot Locker - $2.78 cash per share.
Sears Holding - $6.12 cash per share.
Abercrombie & Fitch - - $6.75 cash per share.
I haven’t independently verified these numbers, but certainly pessimism is too great in this sector and investors should start looking for the companies that will emerge from the recession.
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