Date: 5/21/12
Price: Free
SmallCap Network provides comprehensive research and opinions on JWN, AMZN, NILE, DG and OSTK.
Dollar General (DG), Blue Nile (NILE), & Nordstrom (JWN) are - Surprise - Cyber Monday Plays... Not That AMZN & OSTK Aren't.
With Black Friday now just a fading memory, Cyber Monday is coming into view. That puts names like Blue Nile (Nasdaq:NILE), Dollar General (NYSE:DG) and Nordstrom, Inc. (NYSE:JWN) right in the middle off the investment radar. Expecting to hear Amazon.com (Nasdaq:AMZN) and Overstock.com (Nasdaq:OSTK)? After all, both were built from the ground up solely to attract a wide audience to websites. Yes, OSTK and AMZN may well get the 'Cyber Monday bump'. They're obvious plays though, and the benefit of online-shopping's growth is already baked into the share price. It's DG, NILE, and JWN that are really well-positioned to dole out meaningful surprises for the holiday quarter... surprises the market wasn't expecting, and surprises that really throttle a stock's price once the market figures it out. Here's why.
Many traditional brick-and-mortar retailers also offer online shopping, and most of those e-commerce sites are quite effective stand-alone business. That wasn't the case for Nordstrom or Dollar General though. The former never took online sales seriously until this year (and that was reflected in the online experience for its web-shoppers), and the latter never offered e-commerce at all until this year.
The Nordstrom site has been lauded as superior to its competitors', offering a browsing experience based on fashion 'looks' in addition to brand-based searches. It's not an easy task to tackle, to be sure, with thousands and thousands of items to sell. But, JWN has developed an effective tool to put online shoppers in their local store, shopping for (literally) the items at that store that - in some trial cases - can be delivered the same day as the purchase, if ordered early enough. Shipping for regular online orders is free, to boot.
Deep-discounter Dollar General Corporation has also entered the online fray, and though its new e-commerce site is low-frills so far, it's at least out there on the web now. The melding of online sales with the growingly-popular value merchandise it offers may take a bigger bite of the online pie than competitors expect.
And just for perspective, DG has been on a roll with or without online sales - the e-commerce revenue is just gravy. Dollar General Corp. earned $0.47 per share in 2009, $1.31 in 2010, and $1.88 in fiscal 2011 (which is already over). Fiscal 2012 will include 2011's holiday shopping season, and the company was expected to earn a record $2.29 per share without the online shopping offer. Add in one more sales venue, and even that lofty outlook could be left in the dust.
And Blue Nile? The company doesn't lack its critics to be sure, who rightfully note that margin percentages seem to be shrinking while the top line grows. What these critics omit is how NILE has been growing its bottom line since 2008, and had it not been for 2007's unusually profitable earnings level of $1.04 per share, the earnings growth streak would have been in place since 2005 - it's as if the recession never happened for the company. More important, with big earnings success and positive (and rising) expectations from brick-and-mortar competitors, Blue Nile, Inc. may well outshine the pessimistic forecasts for Q4.
None of this is to suggest Overstock.com and Amazon.com are bad Cyber Monday (or even Christmas shopping) plays. They're fine. There's no surprise aspect to them though, and the fact that online shopping this coming Monday should swell by 20% more than last Cyber Monday's total is already priced in. With DG, JWN, and NILE, the speculative value is packed in by the fact that none of them are getting enough due credit for their online prowess yet.
Many traditional brick-and-mortar retailers also offer online shopping, and most of those e-commerce sites are quite effective stand-alone business. That wasn't the case for Nordstrom or Dollar General though. The former never took online sales seriously until this year (and that was reflected in the online experience for its web-shoppers), and the latter never offered e-commerce at all until this year.
The Nordstrom site has been lauded as superior to its competitors', offering a browsing experience based on fashion 'looks' in addition to brand-based searches. It's not an easy task to tackle, to be sure, with thousands and thousands of items to sell. But, JWN has developed an effective tool to put online shoppers in their local store, shopping for (literally) the items at that store that - in some trial cases - can be delivered the same day as the purchase, if ordered early enough. Shipping for regular online orders is free, to boot.
Deep-discounter Dollar General Corporation has also entered the online fray, and though its new e-commerce site is low-frills so far, it's at least out there on the web now. The melding of online sales with the growingly-popular value merchandise it offers may take a bigger bite of the online pie than competitors expect.
And just for perspective, DG has been on a roll with or without online sales - the e-commerce revenue is just gravy. Dollar General Corp. earned $0.47 per share in 2009, $1.31 in 2010, and $1.88 in fiscal 2011 (which is already over). Fiscal 2012 will include 2011's holiday shopping season, and the company was expected to earn a record $2.29 per share without the online shopping offer. Add in one more sales venue, and even that lofty outlook could be left in the dust.
And Blue Nile? The company doesn't lack its critics to be sure, who rightfully note that margin percentages seem to be shrinking while the top line grows. What these critics omit is how NILE has been growing its bottom line since 2008, and had it not been for 2007's unusually profitable earnings level of $1.04 per share, the earnings growth streak would have been in place since 2005 - it's as if the recession never happened for the company. More important, with big earnings success and positive (and rising) expectations from brick-and-mortar competitors, Blue Nile, Inc. may well outshine the pessimistic forecasts for Q4.
None of this is to suggest Overstock.com and Amazon.com are bad Cyber Monday (or even Christmas shopping) plays. They're fine. There's no surprise aspect to them though, and the fact that online shopping this coming Monday should swell by 20% more than last Cyber Monday's total is already priced in. With DG, JWN, and NILE, the speculative value is packed in by the fact that none of them are getting enough due credit for their online prowess yet.
Matthew Briar is a paid contributor of the SmallCap Network. Matthew Briar's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
