Discount Retailers Continue to Lag Despite Recovery

Tickers in this article: BIG COST DG DLTR FDO IYC ROST TGT TJX WMT
NEW YORK ( TheStreet) -- Eight of the nine discount retailers I have been following peaked in 2012 between March and October. Only one has been a leader trading to a new multi-year high yesterday. Eight of the nine, including the leader are in the iShares DJ US Consumer Services Sector Index Fund (IYC) , which traded to an all time high this morning in reaction to a better than expected retail sales release.

The last time I covered these stocks as a group was on Dec. 13, 2012, in Discount Retailers, From Leaders to Laggards . Not much has changed in their ValuEngine characteristics, but the stocks have had choppy stock price performances since then.

All nine discount retailers are buy-rated according to www.ValuEngine.com, five are undervalued by 1.6% to 9.9%, and four are overvalued by 4.4% to 11.4%.

Three have declined by 1.3% to 21.1% over the last twelve months and six have gained between 2.4% and 21.3%. These stocks are projected to gain between 5.9% and 9.7% over the next twelve months. The twelve-month trailing P/E ratios are between 14.5 and 24.3.

Technically, four are below their 200-day simple moving averages (SMA), while five are above their 200-day SMAs.

I covered six of these nine retailers on Dec. 27, in The Retail Bubble Stocks are Deflating , and covered three of their earnings reports on Feb. 25, in Retailers Headline This Week's Earnings .

This morning we learned that Retail Sales rose by 1.1% in February, well above the 0.5% consensus estimate from economists. We remain under a ValuEngine Valuation Warning with 65.0% of all stocks overvalued. The retail-wholesale sector, which contains all nine retailers profiled today is 16.5% overvalued.

Chart Courtesy of Thomson / Reuters

iShares DJ US Consumer Services Sector Index Fund traded to a new all time high this morning at $96.33. The daily chart above shows overbought momentum with the 21-day, 50-day and 200-day SMAs at $93.84, $92.18 and $85.97. My quarterly value level is $88.18 with monthly and semiannual pivots at $94.40 and $95.48 and this week's risky level at $97.60.

Reading the Table

OV / UN Valued : The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.

Last 12-Month Return (%) : Stocks with a Red number declined by that percentage over the last twelve months. Stocks with a Black number increased by that percentage.

Forecast 1-Year Return : Stocks with a Red number are projected to decline by that percentage over the next twelve months. Stocks with a Black number in the Table are projected to move higher by that percentage over the next twelve months.