re M - this might or might not work. I have two comments-
1) never buy a stock mainly for its dividend, especially when it tries out turn itself around
2) I have generally looked for turnaround situation, but now I avoid the. I believe times have changed. cyclical issues are one thing, but when business models are under attack, turnarounds typically are much less likely to be successful than with other issues. Retail in particular is tough and turnarounds there are rare (BBY being one). The reason is that the competition they are up against is formidable and almost impossible to beat. Macy’s is not competing against the likes of Amazon, Stitchfix, but also many of its suppliers going directly to the consumer using e-commerce. I agree their stores are still Ok, unlike JCP, Sears they do decently, but the department store model is dead, imo. So for me, the risk reward ratio isn’t really compelling, even though just based on metrics, M looks undoubtedly cheap.
I did buy a bit of CVS yesterday. It’s also a turnaround in a way that they need to change their business model. We will see how it works out, and I was wrong on WBA (which I exited), but I like the way they reconfigure their stores to add minute clinics, health hubs pilot (in Houston) and generally reduce general merchandise in favor of health related offerings. The stores that I have seen reconfigured make much more sense to me. then on the other hand, it is possible that Amazon will make an entry in the health sector, possibly via the BRK/JPM/AMZN Venture of other means. |
