Sell This Retailer

Today, I am recommending the sale of Big Lots (BIG). 

At a time when other stocks hurt by the China tariffs are recovering, BIG continues to struggle. Unfortunately, BIG is one of a handful of retailers the market seems reluctant to support at practically any price, judging the company’s future earnings power as highly uncertain.

While I disagree with this assessment, I do not see short-term relief from the market’s current view of BIG. In fact, the stock could be vulnerable to further slippage should earnings — due to be released at the end of the month — prove disappointing, or if the company’s management offers downcast guidance for the seasonally critical fourth quarter.

At some point, BIG and other neglected retailers could be great investments. However, given the market’s overall lack of confidence, I would rather see a clearer inflection point. Sell BIG.