Market Wrap-Up for May 20 (FO, GPS, BKS, FL, RL, HNZ, more)


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It was another sideways week for the market as the month of May has been mostly flat for the indices. Pulling down the averages once again were retail sector names. It has been a strong ride recently for many retail names, but seasonality has always been a concern for investors. We are still a few months away from back-to-school purchases, which then leads into the holiday season.

Disappointing numbers from the likes of Gap Inc. ( GPS ), Ann Inc. ( ANN ) (formerly known as AnnTaylor), and Aeropostale ( ARO ) weighed down the indexes. Foot Locker ( FL ), however, bucked the trend and moved nearly 13% higher following its positive earnings report. Meanwhile, the selling hit apparel makers like VF Corp ( VFC ) and Polo Ralph Lauren ( RL ). Oil prices were sliding early in the day, but did come back to close with a gain. We recently removed several key energy names from our Best Dividend Stocks List , as we think investors should hold off putting any new capital in much of the sector for now.

There are a couple of deals in the news today that are real yawners from my standpoint. Fortune Brands ( FO ) is selling its golf division to Fila (which is based in South Korea). The golf business is in a deep struggle and has been for a few years, due to its exposure to the real estate market, consumers' lack of disposable income, and the implosion of Tiger Woods. While it's true that golf is tied deeply to the economy, the reality is that the game is seeing dwindling success from American-born players, which is following the pattern we saw with Tennis from the mid-80′s on. Fila is acquiring the popular FootJoy and Titleist brands as part of the deal, but again, the acquisition appears to have little upside as far as growth goes.

The other deal today, which is very surprising to me, is famous media investor John Malone of Liberty Media making a $1 billion offer to acquire brick-and-mortar book retailer Barnes & Noble ( BKS ). This one is a tremendous head-scratcher, especially with news out of Amazon yesterday that Kindle electronic book sales have now passed their traditional print book sales for the first time. The trend is clearly headed to everything going electronic, and Amazon's Kindle is the runaway leader in the e-book space. What exactly does John Malone see here that I am missing? I see absolutely no future growth prospects for a company like Barnes & Noble, but I suppose you've got to tip your hat to the investment bankers for finding buyers for these kinds of deals. My guess is Warren Buffett and Berkshire Hathaway ( BRK-A ) probably told investment bankers calling about interest in these deals that they had the wrong number! One thing you can't argue about when it comes to Warren Buffett and his appetite for deals is they usually get it right. That's because they invest in quality companies with great future growth prospects - just like we encourage readers to do here on

Here's one last little anecdote I'd like to share with readers today. I was on the phone with my mom yesterday and she was telling me how my dad's mouth was still very sore after having a tooth pulled a couple of days back. They called the dentist and got a prescription for some pain medication, and my mom kidded my dad about the prescription cost. The bill came out to just $12 due to the prescription insurance they have. Wouldn't you know it though, my dad is always fussing about paying the $44 a month insurance bill! What I can't understand is why he's worried about that when they're forced to pay $13,000 a year in property taxes - which they could avoid entirely if they were willing to sell their home and rent a nice condo instead. Of course, they're earned the right to do whatever makes them happy regarding their home (in this case, staying there for now), but this is the type of stuff that drives me crazy! People all too often focus on the relatively small expenses and ignore the big ones that they have the power to change.

Like my parents, many baby boomers are approaching tough decisions about their living arrangements in their later years. My parents have 100% equity in their home, as it is totally paid off, but home prices have been falling for the last 4-5 years. As those values drop, their equity is also lost. Using interest income to pay off the bills is an option, but psychologically you feel like you are falling behind as assets stop growing. Obviously you can't take your money with you when you die, but it's great to keep a legacy going and invest it into future generations. That is my aim as I grow older - to pass on assets that produce income to my children (and eventually their children).

As we look ahead to next week's quarterly earnings results, we will see reports from major companies like Campbell Soup ( CPB ), Costco ( COST ) and HJ Heinz ( HNZ ), just to name a few.

Be sure to catch up with our latest watchlist updates this weekend on Premium , including reports on earnings/story stocks, analyst upgrades/downgrades, dividend ETFs, and much more. And as always, you can view our current recommendations on our industry-leading Best Dividend Stocks List . And if you haven't already, be sure to check out "What's New on Premium" post we published recently to get up to speed on all the great new enhancements we've made to our service recently.

Thanks for your support everybody and thanks for reading my newsletter too! Please pass this on to anyone you think we can get inspired and educated about building wealth and using common sense to do so.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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