Here Comes Spending-Palooza – What About the Profits?

You probably have your Thanksgiving Day plans set. If you’re like a lot of folks, you also have your days-after-Thanksgiving plans set.

And those plans probably include shopping.

According to the National Retail Federation, 182 million people are estimated to shop from Thanksgiving to Black Friday all the way through to Cyber Monday. That’s nearly 10% more than last year and the highest estimate since the federation began tracking data six years ago.

After sleeping off the turkey-induced tryptophan coma, you can roll yourself out of bed and have the pleasure of shopping at 5:00 a.m. at some stores.

I’ll pass, thank you. But I will probably take advantage of online deals sometime over the weekend.

Sales for November and December are projected to hit somewhere around $960 billion, which is about 3.5% more than last year. It won’t be long before we’re talking $1 trillion in end-of-year spending.

That has to be good for companies that sell all this stuff, right?

Let’s run the three biggest retailers through the Quantum Edge system and see.

Walmart (WMT)

With more than $600 billion in sales last year, Walmart is by far the king of retail.

And, yes, stores open at 5:00 a.m. on Friday.

The retail giant just reported earnings last week, beating expectations for both sales and profits. But forecasts for the current quarter were below expectations, and investors hit the stock for a nearly 9% drop when almost everything else is moving up.

Walmart may be the beast of retail, but with a Quantum Score of 56.9, the stock doesn’t score well enough for me to rate it a buy. It’s a solid company, of course, but not among the elite stocks to own right now.

The fundamentals are okay, but not great. Sales and earnings growth are so-so. Profit margins are not the biggest, with the company keeping two cents of every dollar it brings in. And debt is a concern at a chunky 76.8% of equity.

The stock’s technical metrics are similarly lukewarm. Shares were up nearly 20% so far this year until last week’s earnings report. They had edged ahead of the S&P 500’s 2023 return, but lost that lead with the post-earnings slide.

My system picked up two Big Money buy signals (green bars) right before earnings as WMT hit a new 52-week high, but then we also see a sell signal (the red bar) last Friday after quarterly results.


As well-known and as big as Walmart is, there are better stocks to buy right now.

Amazon (AMZN)

Walmart is the overall king of retail, but Amazon is clearly the online king. With $343 billion in sales last year, it was the second-largest retailer.

Of course, Amazon is no longer just a bookstore but now includes music services, video streaming (including original content), its popular Amazon Web Services for cloud computing and web hosting, and much more.

The stock has had a fantastic year, up nearly 75% as the recent recovery lifted it from $120 to $145 in less than a month.

Layering on my quantitative analysis, we get a more mixed picture.

AMZN’s overall Quantum Score of 69 is quite good. It’s a hair outside of what I consider the optimum buy zone between 70 and 85.

And given the stock’s performance, the technicals are stellar with an 85.3 rating.

So far, so good. But I hesitate when I see the fundamentals, which rate a disappointingly low 45.8.

Earnings and sales growth are okay to even good. But as it has always been the knock against Amazon, profitability is razor thin. In fact, the company lost 27 cents a share last year, and its current profit margin is -0.5%.

Another concern is debt. The company owes more than it’s worth, with debt at 106.1% of equity. And after the stock’s nice run, valuation is more of a concern with shares trading at 55 times expected earnings.

AMZN has been a monster winner through the years, and it may well be in the coming years. At the moment, however, the quantitative potential lies almost entirely in the technicals. Its fundamental concerns would be enough for me to look elsewhere.

Costco (COST)

Costco is the third-largest retailer and largest publicly traded warehouse shopping club. Sam’s Club has more U.S. locations, but it’s part of Walmart.

Its Quantum Score is a little bit lower than Amazon’s at 65.5, but that’s still quite good. It is also better balanced with the technicals scoring 70.6 and the fundamentals 58.4.

Shares have had a solid year, outperforming the S&P 500 and sidestepping a major sell-off from August to September. They came within pennies of $600 on Friday for the first time since April 2022.

Sales and earnings growth is acceptable. The 2.6% profit margin is decent for a retailer, and debt is manageable at 42% of equity. Shares are borderline pricey but not outrageously overvalued. And the technical metrics are all solid to good.

I like what Big Money has done with this stock. Look at the chart from my Quantum Edge system below, and you see zero sell signals at all in 2023, and even some buy signals (green bars) in late September and early October. And you can see the three recent buy signals on the right.


These retailers will bring in a lot of money in the coming days and through the end of the year. And they are good business. Their stocks are just not the highest-rated overall, fundamentally, or technically. I don’t think you would make a horrible mistake buying them, but there are stronger stocks with bigger profit potential.

For example, the top retailer in my system boasts a fantastic 86.2 Quantum Score, with the technicals and fundamentals also in the 80s. It’s also a little surprising, given that it’s a high-end retailer.

And the 12 stocks currently in our Quantum Edge Trader portfolio average a Quantum Score of 77.9. That strength is reflected in the recent performance, with all 12 stocks rallying 16.3% on average in just three weeks since the market’s low on Oct. 27.

Have a great holiday weekend. And good luck shopping – for your gifts and your stocks. It’s a good time to find bargains in both.

Talk soon,

Jason Bodner
Editor, Jason Bodner’s Power Trends