Investing

Goldman Sachs Says Sell These 5 Stocks Into Market Strength Now

Macy’s

This iconic retailer was in a horrible death spiral, even before the pandemic. Macy’s Inc. (NYSE: M) is the largest national department store chain by revenue. Regional department stores have undergone heavy consolidation over the years, and the present-day Macy’s organization is the result of a 2005 merger between Federated Department Stores and the May Company. The company also operates the luxury chain Bloomingdale’s. Macy’s offers a wide assortment of apparel, accessories, footwear, furniture and home goods.

Macy’s announced last month that Chief Financial Officer Paula Price would step down as of May 31 and would remain as an advisor through November. The change in management during a turbulent period adds an additional level of uncertainty to a difficult story. The company has also withdrawn its 2020 sales and earnings outlooks, and it suspended its quarterly cash dividend.

Goldman Sachs lowered the $7 price objective to $6, and the posted consensus target price is $7.77. Macy’s stock was last seen below both levels at $5.16 per share.

PVH

While not a retailer, the company’s products are sold through retail outlets, and that is proving to be difficult with the current prevailing situation. PVH Corp. (NYSE: PVH) is a global branded apparel vendor with three main business groups: Calvin Klein, Tommy Hilfiger and Heritage Brands. It distributes its branded apparel through three main channels: wholesale, retail and licensing operations.

Many across Wall Street feel there is added uncertainty about how wholesale partners will order for the second half of this year. It’s important to note that typically wholesale recovers less quickly than retail. PVH’s lean inventory positioning will shield some markdown pressures, but the road remains rocky.

The $26 Goldman Sachs price objective was boosted to $33, which compares with the $51.63 consensus price target. PVH stock closed trading at $44.27 on Tuesday.

Texas Roadhouse

Like many restaurants, Texas Roadhouse Inc. (NASDAQ: TXRH) offers takeout service, but that is hardly enough volume to sustain the chain. The company is a full-service, casual dining restaurant chain that offers assorted seasoned and aged steaks hand cut daily on the premises and cooked to order over open gas-fired grills.

Texas Roadhouse operates restaurants under the Texas Roadhouse and Aspen Creek names. The firm also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches. It also provides supervisory and administrative services for other licensed and franchised restaurants.

Here, the Goldman Sachs price target rose to $31.50 from $28.50. The consensus target for Texas Roadhouse stock is $55.53, and the last trade hit the tape at $43.66, down almost 6% on Tuesday.

You don’t need to be an analyst to see the common thread here: retail stores and the products that are sold in them. It should be noted that all these stock have been pummeled already from 52-week highs, but that doesn’t mean they can’t go lower. You can bet that predatory hedge funds are adding some of these stocks to the short book they run.

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