Staycation or Vacation?

As part of round three of opening up after covid, I expected people to get out of the house and start traveling again.  Mind you, people have been traveling, but we haven’t seen a return to the pre-pandemic levels just yet.  With more countries opening their borders, my theory was that people would shrug off the cost of travel and go enjoy the summer months in locations that may have been closed off or more difficult to get to over the last two years.

Certainly, we saw earnings from the airlines like Delta Airlines (DAL) agree with my theory as they projected an uptick in travelers this quarter.  Some of the other travel plays like Airbnb (ABNB) also projected a strong summer.  

But let’s just take a step back and look at what we saw from retail numbers last week.  Walmart (WMT) and Target (TGT) announced that the number of customers is steady, but their data is showing that consumers are trading down to the lower-priced items vs some brand-name staples.  If people are altering their shopping habits, does that mean summer travel is off the table now?  

Or maybe in an odd way the retail numbers support the travel theory.  Instead of spending money on things, people are still willing to shrug off higher costs to buy experiences.  A mentor of mine often talks about one key to happiness is through experiences over things.  

Going out for experiences doesn’t mean traveling far.  After all, who wants to travel after we saw more than 2,800 canceled flights over the weekend because airlines are short-staffed in one key area – pilots!  

The EU banned Russian oil, which sent prices soaring to a 1.5-month high, which is sure to raise the cost of traveling to distant destinations.  How do you still go on vacation without going anywhere?

Numerous stories are coming out about going on a staycation rather than a vacation.  You can still visit with family and friends, but you don’t have to travel.  

Either way, staycation or vacation, If you’re going to go explore the world or your own backyard with family and friends, you need to make sure you’re looking good, right?

That got me thinking about companies in the specialty retail industry.  Companies that focus more on clothing and beauty products.  What do the numbers say about spending in those industries?

Today’s trade ideas are in the specialty retail industry.

First I wanted to see how clothing companies like Stitchfix (SFIX) are doing.  As long as people are working from home the majority of the time, the subscription-based clothing retailer has hit headwinds that it can’t seem to clear.  

Sales have actually increased year-over-year for the past five years in a row, but earnings-per-share has yet to recover to positive levels.  The company lowered guidance for the rest of the year, citing the difficulty to onboard new clients.  The only good news is that spending per existing client is on the rise with the launch of their Freestyle service.

Stitchfix (SFIX)

Likewise, The Gap (GPS) has been struggling to break out of its downtrend from May of 2021.  They cited similar issues – difficulty finding new customers led to deeper than normal discounts combined with increased costs.  

Stitchfix (SFIX)

Ok, so people are not spending money on clothes… got it. 

Then I came across Ulta Beauty (ULTA).  People are still spending money on beauty products.  Ulta CEO, David Kimbell said, “Consumers continue to be highly engaged with the beauty category as they participate in more in-person activities, engage in more travel, and lean into experiential spending,”  It doesn’t matter if you’re doing a vacation or a staycation, people are still interested in beauty products.

ULTA had earnings last Friday and shares popped over 12% on news that sales climbed 21% year-over-year and in-store traffic rose 10%.  Their average ticket price rose by 7.3% as shoppers spent more per visit.  We’ve seen this with some other retailers as well.  One theory is that consumers are making fewer trips to conserve gas, but spending more per trip.  

Ulta

Another company to look out for is The Beauty Health Company (SKIN).  SKIN’s CEO has worked for several big-name brands, one being Kylie Jenner Beauty, Unilver, and Loreal.  Their Chief Experience Officer worked at Google and Target.  

SKIN’s main brand is HydraFacial, which claims to cleanse skin deeper than traditional microdermabrasion.  They recently unveiled an upgrade to their HydraFacial system, called HydraFacial Syndeo.  This new delivery system is connected to the cloud, allowing providers to see consumer history and preferences.  

The company has an interesting story with long-term growth prospects and is currently on a watch list of mine for Wealthy Investor Society for a possible upcoming issue.  

 

Skin

It’s currently trading around $14 and its 50-day moving average is around $20.  Its 52-week high sits around $30.  The overall market is still bearish, despite the rally from last week.  But if beauty stocks continue to deflect inflationary pressures, we could see a bounce in this stock.

 

If you have any questions, comments, or anything we can help with, reach us at any time.

 

Jeff

Guest Writer, Filthy Rich, Dirt Poor

Editor, Wealthy Investor Society

Jeff

Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society

Is the Consumer Expectation Index a Leading Indicator?

Is the Consumer Expectation Index a Leading Indicator?

johnh
On June 28, 2022

Just how correlated are consumer expectations with the reality of the market? Can this be used to predict where market prices will go?

Keep reading…

A Case For A Bearish Reversal

A Case For A Bearish Reversal

johnh
On June 27, 2022

Then something happened in the market today and this one chart may be presenting a different side to the story. This chart pattern may be signaling the next leg down is right around the corner and now is the time to get ready.

One Stock To Watch Next Week

One Stock To Watch Next Week

johnh
On June 23, 2022

Let’s look at a strategy you can use by selling stock options to potentially take advantage of a near-term bump in the ride-sharing companies.

Most Successful Options Strategy

Most Successful Options Strategy

johnh
On June 22, 2022

Selling options for weekly premiums can be a good strategy if you know how to navigate the extreme peaks and valleys each week.

What’s Really Behind The Mega-Cap Move?

What’s Really Behind The Mega-Cap Move?

johnh
On June 21, 2022

If you are an options trader and want to take on a little risk, I’ll show you an options trading strategy with a potential 55% gain by July 22, 2022.

All Eyes On Energy

All Eyes On Energy

johnh
On June 20, 2022

With the Energy stocks beaten up so much last week, I wouldn’t be surprised if we see a little bump back up this week.

I have an idea for an Energy trade.

Shake Out Or Another Leg Down?

Shake Out Or Another Leg Down?

johnh
On June 16, 2022

Get Today’s Trade Idea

We’re going to stick with point-and-figure charts today. The energy sector has been red hot but has lost some ground over the last few days. Oil and Gas companies could be negatively affected by a slowing global economy.

5 Things You Need to Know About Fed’s Biggest Rate Hike In Decades

5 Things You Need to Know About Fed’s Biggest Rate Hike In Decades

johnh
On June 15, 2022

What is the Fed Doing?
In an effort to combat out-of-control inflation, the Fed is increasing interest rates to slow down the growth of the economy. The trick is to do so without causing a recession.

Is Zoom a Buy or Sell Right Now?

Is Zoom a Buy or Sell Right Now?

johnh
On June 14, 2022

Zoom has become so part of our vernacular, that people use it as a verb. Sort of like how people ask for a Kleenex, even though that’s just a name brand of facial tissue. So if everyone is still Zooming, at home, at work, and at school, why has the stock been falling?

Timing The Bottom

Timing The Bottom

johnh
On June 13, 2022

Keep reading to see if discretionary spending and the price of oil are correlated and if we can pick a market bottom.

PREV NEXT

Contact

267 Kentlands Blvd #225
Gaithersburg, MD 20878

P. (866) 257-3008
(Monday-Friday 9:00 AM-5:00 PM EST)

E. [email protected]

Products

About

Publisher of actionable and proven strategies and tactics to help investors build wealth and reach seven-figure portfolios.

Receive the latest news

Subscribe To Our Daily Newsletter

Get notified about new articles, special events, training, and much more

Like What You See?

Leave your info below to get more options and trading ideas to your inbox

Yes, send me news to my inbox.