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The best gifts are the ones that you make yourself

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December 24, 2008 – Comments (5) | RELATED TICKERS: JAS.DL

 

Happy Holidays everyone.  Remember the old saying, "The best gifts are the ones that you make yourself?"  Well, I am attempting to use this ancient proverb (well not quite, but if you can you think of a better description I'll use it ;)) to earn some CAPS points.  Check out the following article that ran in the New York Times earlier this week: For Craft Sales, the Recession Is a Help.

According to the story, sales at craft stores are higher this Christmas than they were last year.  The theory behind this phenomenon is that strapped consumers are cutting back and in some cases making their own gifts rather than buying them.  It makes sense to me. 

According to a recent report by the Commerce Department overall U.S. retail sales dropped a massive 7.4% in November, so any chains that are seeing flat...let alone higher sales should be a relative outperform.  This leaves the question, how does one play this theory in CAPS. 

The 1,000+ store crafts chain Michaels Stores reported strong November and December sales, but it isn't exactly an option because it is owned by the publicly traded hedge fund Blackstone.  Not only are its results insignificant for that massive pile of garbage, but I am already thumbs down BX in CAPS.

I plan on giving the thumbs up (if I can free up space in my 200 active picks) to Jo-Ann Stores (JAS).  It is the leader in the craft sector, with 19% market share.  According to reports, it has been experiencing the same strength that other stores in the sector have been experiencing.  The company's lack of dividend and my fear of consumers will prevent me from buying this stock in real life, but any store that can hold its own in this sort of environment and is only trading at 10 times earnings looks like a decent CAPS bet to me.

 

Author's note, for some reason the old Beastie Boys' song "She's Crafty" was stuck in my head while hammering out this post. Man License to Ill was a great album.

 

Deej

5 Comments – Post Your Own

#1) On December 24, 2008 at 8:31 AM, Gemini846 (82.65) wrote:

Jo-Ann's must have been hammered. We ordered about $80 worth of stuff from them on-line this season and it took over a month for delivery. Our one trip to the store to pick up some finishing touches showed a store that was picked clean. Maybe they weren't ready for the deluge. We ended up at Big Lots.

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#2) On December 24, 2008 at 9:54 AM, GNUBEE (26.83) wrote:

Good scouting Deej, and thanks for the confirmation Gemini.

And Yes, That is one magnificent album, timeless you might say.

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#3) On December 24, 2008 at 10:10 AM, kdakota630 (29.81) wrote:

*sigh* I suppose it is a timeless album, and was pretty influential in musical circles, but it is pretty much the complete opposite of one of my favourite albums.

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#4) On December 24, 2008 at 10:15 AM, Tastylunch (29.54) wrote:

Interestingly enough AC Moore (ACMR) can't seem to get their act together. That should help JAS as well (less competition)

Disclosure: I have shorted ACMR several times in the past year. Currently have no share short

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#5) On December 24, 2008 at 10:50 AM, binv271828 (< 20) wrote:

Licensed to Ill. ooaaahhhhyeeaahhhhh.
Thanks Deej, good memories :)

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