The best gifts are the ones that you make yourself
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.