​Top Picks 2018: Macy’s

MoneyShow |


Our selection for a growth company is Macy’s (M), a growth-oriented pick for 2018, notes Russ Kaplan in Frank, Fox & Hoagstrom’s Heartland Advisor.

With the rapid growth of online shopping, department stores have taken a drubbing over the past few years.

They are perhaps the most unpopular segment of the stock market. Our current selection, Macy’s, is indeed a department store and we like it for a number of reasons.

First of all, we think that there is a future for department stores and for the better ones such as Macy’s. The sharp reduction in the stock price is way overdone. Back in 2015, Macy’s sold as high as $73.60.

Today it is selling at a recent price of $25, which is a massive drop. To us, this represents an overreaction and makes Macy’s a wonderful buying opportunity.

The fundamentals of the company are sound, and according to our measures of values, Macy’s is undervalued. For example, the price/earnings ratio on the stock is 11.



As a reaction to the emergence of online selling, Macy’s has reacted to its own online shopping capabilities and so far this has been proving fruitful.

The combination of department store sales and online shopping has shown an excellent return on equity of 22.5%. This is not reflective of a company that is going out of business.

Download MoneyShow’s 35th Annual Top Picks Report: The 100 Best Stocks for 2018

Besides its profitability, Macy’s is sitting on expensive real estate, which we think is greatly under-reported on its financial statements. This is especially so with its flagship Manhattan property.

For those of you who are interested in income, Macy’s pays an astounding dividend of 5.84% and is unlikely to be cut. All and all we think Macy’s has the potential for excellent growth in the future.

Russ Kaplan writes in Frank, Fox & Hoagstrom’s Heartland Advisor.

Subscribe to Frank, Fox & Hoagstrom’s Heartland Advisor here…

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
M Macys Inc. 29.96 0.55 1.87 10,651,547 Trade

Comments

Emerging Growth

MGX Minerals Inc.

MGX Minerals is a diversified Canadian mining company listed on the Canadian Securities Exchange. MGX is engaged in the acquisition and development of industrial mineral deposits in western Canada that…

Private Markets

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.

Voleo

Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…