Replies to post #95519 on Savvy Trades and Investments

[wadegarret]

Bmrboy, JWN

First, the reason to compare JWN to M, is the same reason that one would compare any company they're valuing to another in the same exact sector. That is, to understand what the value of a stock is, you have to look at it vs peers in the exact same sector, and compare PE going forward, revenue/earnings growth, etc. Without doing that step, valuation attempts are fruitless IMO

So to answer why I would short JWN here. Simple, the only reason retail is doing well right now, is the comeback from COVID stay at home people finally getting out. Bottom line is though, retail stores in general is a dying breed, with the internet, and this temporary spike will end over the coming year or so, especially with interest rates going up(hurts retail in general). As I stated, making the comparison of peers in valuing a stock is paramount. Point is, M had great earnings as well as JWN, and is selling for a PE of 5.9 going forward, while JWN is selling for an 8.5 PE going forward. One should be wondering, is M too cheap, or JWN too expensive. For me, after a stock goes up 40% in one session, it's a short, unless it's the beginning of a huge turnaround. In this horrible market, and with interest rates on the rise, I don't see this positive report as meaning a turnaround for JWN.