Investing Regrets? A Guide to Costanza-Method Stockpicking. — Barrons.com

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By Teresa Rivas

"My name is George. I'm unemployed and live with my parents."

That iconic line lands George Costanza a date in the Seinfeld episode "The Opposite." Realizing all his instincts are wrong, he decides to do the inverse, leading to personal and professional success, at least temporarily.

I always knew George and I were kindred spirits, from his inclination to dress by mood--this one is morning mist, he tells his friends--to his love of eating cheese by the block. And I agree it should be socially acceptable to drape oneself in velvet.

This year, I've been thinking about "The Opposite" more than ever. Far too often, I realized belatedly that going against my instincts would have been the right choice.

I have made plenty of calls on stocks that worked out. Both Viking Holdings and Expedia have taken investors on a good ride, and shareholders have been able to sleep well with Hyatt. Gilead Sciences has delivered healthy gains. TJX turned out to be a great bargain, and while it is too early to say if it will go the distance, Burlington Stores has notched a couple of strong weeks to end the year.

Yet like George, I am more likely to dwell on my mistakes. ("God would never let me be successful," he says in the 1993 episode "The Pilot.") The last day of the year seems a fitting time to review the times I wish I hadn't listened to my instincts.

First and foremost, I wish I had just done the opposite of recommending Academy Sports and Outdoors at the start of the year. The sporting goods retailer had a fantastic run throughout the pandemic and beyond, and its stock didn't do worse than industry leader Dick's Sporting Goods.

Still, athletic gear was a tough space to be in this year, and I should have simply left my original July 2021 article alone. The shares are still up about 40% since I wrote favorably about the stock back then.

I also have plenty of regret about highlighting Sherwin-Williams in July. The positive factors I anticipated didn't materialize, and much like my most recent home painting project, the results weren't what I was hoping for.

I often struggle with whether to write a stock call just before earnings reports because that means the stakes can be much higher. Getting it right means investors can get in before a pop, but a mistaken call means that their holdings lose value right away.

I have been burned by the latter before, so I shied away from doing a pre-earnings pick on SharkNinja in early November. The stock jumped by double digits on the report, and remains more than 20% higher. I hope to have a chance to write about it if the shares pull back.

Timing was similarly an issue with my Kinder Morgan article in June: Natural gas and the stock had been trending higher in the months before the pick, leading me to foolishly hope both could avoid a summer slump. That didn't pan out, though a more recent recommendation to buy fellow natural-gas play Expand Energy in October has fared much better.

The Costanza technique isn't for the faint of heart. Immediately searching for the opposite of what you really think can leave you confused. Nor did it really work out for George: The job he lands at the Yankees by ignoring his instincts ultimately turns out to be a disaster, leaving him much where he started as the series ends.

So I can't promise that I will faithfully follow the Costanza Method next year. The best I can hope for is to have another year like 2025, with more success stories than not. If it doesn't work out, when people ask me what I do at cocktail parties, I'll just say I'm an architect.

I've always wanted to pretend to be an architect.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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Winners And Losers Of Q3: Ollie's (NASDAQ:OLLI) Vs The Rest Of The Discount Retailer Stocks

Stock Story

Five Below

-1.93%

Ollie's Bargain Outlet

Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Ollie's and its peers.

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

The 5 discount retailer stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 0.8% below.

Thankfully, share prices of the companies have been resilient as they are up 5.1% on average since the latest earnings results.

Weakest Q3: Ollie's

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Ollie's reported revenues of $613.6 million, up 18.6% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a narrow beat of analysts’ EBITDA estimates but revenue in line with analysts’ estimates.

“Thanks to the extraordinary execution of our team, we delivered another strong performance in the third quarter. We opened a record number of stores, continued to accelerate membership growth of our Ollie’s Army loyalty program, widened our price gaps to the fancy stores, and delivered industry-leading sales growth, all while driving significant improvement on the bottom-line,” said Eric van der Valk, President and Chief Executive Officer.

Ollie's achieved the highest full-year guidance raise of the whole group. Still, the market seems discontent with the results. The stock is down 14.6% since reporting and currently trades at $108.82.

Best Q3: Five Below

Often facilitating a treasure hunt shopping experience, Five Below is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Five Below reported revenues of $1.04 billion, up 23.1% year on year, outperforming analysts’ expectations by 6.3%. The business had a stunning quarter with EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates.

Five Below pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 14.6% since reporting. It currently trades at $188.50.

Burlington

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Burlington reported revenues of $2.71 billion, up 7.1% year on year, in line with analysts’ expectations. Still, it was a satisfactory quarter as it posted a solid beat of analysts’ EBITDA estimates.

Burlington delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is flat since the results and currently trades at $284.

Read our full analysis of Burlington’s results here.

Ross Stores

Selling excess inventory or overstocked items from other retailers, Ross Stores is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $5.60 billion, up 10.4% year on year. This print surpassed analysts’ expectations by 2.6%. It was a very strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

The stock is up 12.5% since reporting and currently trades at $180.59.

Read our full, actionable report on Ross Stores here, it’s free for active Edge members.

TJX

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

TJX reported revenues of $15.12 billion, up 7.5% year on year. This result topped analysts’ expectations by 1.5%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ gross margin estimates.

The stock is up 6.8% since reporting and currently trades at $155.47.

Read our full, actionable report on TJX here, it’s free for active Edge members.

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Retail Stocks Could Get a Tax Refund Boost in 2026 — Barrons.com

Dow Jones Newswires

Ollie's Bargain Outlet

By Teresa Rivas

The pandemic was great for introverts, sourdough bread enthusiasts, and retail stocks. The One Big Beautiful Bill could provide the biggest boost to retail stocks since then, even if it leaves the wall flowers and baking enthusiasts out in the cold.

As awful as the pandemic was for just about everyone, it could be considered nirvana for retailers. With few entertainment options available, consumers, flush with cash from stimulus checks, were quick to spend the dough on stuff they didn't really need — sneakers, designer handbags, flat-screen TVs, you name it. The State Street SPDR S&P Retail exchange-traded fund gained 42% in 2020 and 43% in 2021. Retail stocks collapsed in 2022, and they have been laggards ever since

The prospect of higher tax refunds, however, could provide the biggest boon for retailers since the pandemics — though not necessarily for the Covid-era winners. Bank of America estimates that the OBBA will result in total tax refunds rising by roughly 18%, or some $65 billion compared with recent years, to a total of $425 billion. That is just over half of the $814 billion in total stimulus in 2020-2021, but still well above average. And if a tariff dividend comes to fruition — Kalshi puts a 39% chance of that happening in 2026 — it could mean an additional $2,000 for everyone with incomes below a certain threshold.

However, shoppers will have different priorities this time around. The stimulus in March 2021 was broad based and need blind; it benefited electronics, home furnishings, and clothing, writes BofA analyst Lorraine Hutchinson. This time, an increased State and Local Tax, or SALT, deduction will disproportionately benefit higher-income consumers, as they're more likely to pay property taxes, but they have remained strong spenders throughout, so no boost should be expected. The prospect of a cap on tariff dividend checks and the reduction of taxes on overtime and tips means more of the benefit will accrue to those with more modest incomes, and they will have to be more prudent due to inflation, reduction in SNAP benefits, and the government shutdown.

"This time, they will likely use the money on necessities and filling gaps elsewhere in their budgets," Hutchinson explains. "We doubt our coverage will experience the same level of outsized benefit this time around." She thinks Ollie's Bargain Outlet Holdings might be one big winner, given its focus on consumable and household goods.

With the essentials taken care of, history tells us Americans will next turn to clothes: During the last round of stimulus in spring 2021, check recipients increased their spending on apparel by nearly three-quarters compared with the week before, with athletic apparel and footwear among the most popular, as spending rose by half in this category. If history repeats. Hutchison's top picks should outperform. They include Ross Stores and Burlington Stores, a recent Barron's pick, along with long-troubled Nike, which could use a win after last week's disappointing earnings report.

After the winter solstice this past weekend, every day brings a little more sunlight. Come springtime — and tax season — the outlook for some retailers could be bright indeed.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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Why Academy Sports (ASO) Shares Are Trading Lower Today

Stock Story

Academy

+0.80%

What Happened?

Shares of sporting goods retailer Academy Sports & Outdoor fell 3.7% in the morning session after the athletic retail sector felt pressure as industry bellwether Nike reported disappointing results.

The negative sentiment followed an 11% plunge in Nike's stock a few days prior, on December 19, after its earnings report revealed significant challenges. Nike's gross margins shrank, which the company linked to rising tariff costs, and its revenue in Greater China fell for the sixth straight quarter. When a major brand like Nike struggles, it often creates concern for the stores that sell its products. The news created downward pressure on retailers like Dick's Sporting Goods, which depend on strong brands to attract customers. This ripple effect likely worried investors that Academy Sports could also face weaker sales or need to increase promotions.

What Is The Market Telling Us

Academy Sports’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 19 days ago when the stock gained 2.9% on the news that Telsey Advisory Group reaffirmed its positive 'Outperform' rating on the stock. The firm, led by analyst Cristina Fernandez, kept its price target at $65.00. This positive assessment followed news from the previous day that Academy Sports had expanded its Board of Directors, appointing Michael Dastugue, Shannon Hennessy, and Clay Johnson. The expansion increased the board from ten to twelve members. This move was intended to add expertise in digital transformation, artificial intelligence, finance, and real estate to support the company's long-term growth goals.

Academy Sports is down 8.2% since the beginning of the year, and at $51.88 per share, it is trading 15.2% below its 52-week high of $61.17 from December 2024. Investors who bought $1,000 worth of Academy Sports’s shares 5 years ago would now be looking at an investment worth $2,597.

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Q3 Earnings Roundup: Dick's (NYSE:DKS) And The Rest Of The Specialty Retail Segment

Stock Story

Dick's Sporting Goods

+3.70%

Sally Beauty Holdings

+1.51%

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at specialty retail stocks, starting with Dick's .

Some retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.

The 9 specialty retail stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 2.7%.

In light of this news, share prices of the companies have held steady as they are up 1.3% on average since the latest earnings results.

Weakest Q3: Dick's

Started as a hunting supply store, Dick’s Sporting Goods is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.

Dick's reported revenues of $4.17 billion, up 36.3% year on year. This print fell short of analysts’ expectations by 10.2%. Overall, it was a disappointing quarter for the company with full-year revenue guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.

Dick's achieved the fastest revenue growth but had the weakest full-year guidance update of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $208.07.

Best Q3: Ulta

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Ulta reported revenues of $2.86 billion, up 12.9% year on year, outperforming analysts’ expectations by 5.2%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

Ulta pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.4% since reporting. It currently trades at $586.65.

Bath and Body Works

Spun off from L Brands in 2020, Bath & Body Works is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.

Bath and Body Works reported revenues of $1.59 billion, flat year on year, falling short of analysts’ expectations by 2.7%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.

As expected, the stock is down 6.7% since the results and currently trades at $19.62.

Read our full analysis of Bath and Body Works’s results here.

Sally Beauty

Catering to both everyday consumers as well as salon professionals, Sally Beauty is a retailer that sells salon-quality beauty products such as makeup and haircare products.

Sally Beauty reported revenues of $947.1 million, up 1.3% year on year. This number surpassed analysts’ expectations by 1.6%. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.

The stock is up 2.7% since reporting and currently trades at $15.07.

Read our full, actionable report on Sally Beauty here, it’s free for active Edge members.

Best Buy

With humble beginnings as a stereo equipment seller, Best Buy now sells a broad selection of consumer electronics, appliances, and home office products.

Best Buy reported revenues of $9.67 billion, up 2.4% year on year. This print beat analysts’ expectations by 1%. It was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.

The stock is down 5.5% since reporting and currently trades at $71.46.

Read our full, actionable report on Best Buy here, it’s free for active Edge members.

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Specialty Retail Stocks Q3 Results: Benchmarking Best Buy (NYSE:BBY)

Stock Story

Sportsman's Warehouse

Dick's Sporting Goods

+3.70%

Warby Parker

+0.96%

Let’s dig into the relative performance of Best Buy and its peers as we unravel the now-completed Q3 specialty retail earnings season.

The 9 specialty retail stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 2.7%.

In light of this news, share prices of the companies have held steady as they are up 1.3% on average since the latest earnings results.

Best Buy

With humble beginnings as a stereo equipment seller, Best Buy now sells a broad selection of consumer electronics, appliances, and home office products.

Best Buy reported revenues of $9.67 billion, up 2.4% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.

The stock is down 5.5% since reporting and currently trades at $71.46.

Best Q3: Ulta

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Ulta reported revenues of $2.86 billion, up 12.9% year on year, outperforming analysts’ expectations by 5.2%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ revenue estimates.

Ulta delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.4% since reporting. It currently trades at $586.65.

Weakest Q3: Dick's

Started as a hunting supply store, Dick’s Sporting Goods is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.

Dick's reported revenues of $4.17 billion, up 36.3% year on year, falling short of analysts’ expectations by 10.2%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

Dick's delivered the fastest revenue growth but had the weakest full-year guidance update in the group. The stock is flat since the results and currently trades at $208.07.

Read our full analysis of Dick’s results here.

Warby Parker

Founded in 2010, Warby Parker designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.

Warby Parker reported revenues of $221.7 million, up 15.2% year on year. This print came in 1.2% below analysts' expectations. Zooming out, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but full-year revenue guidance missing analysts’ expectations.

The company reported 2.66 million active customers, up 9.5% year on year. The stock is up 41.4% since reporting and currently trades at $26.94.

Read our full, actionable report on Warby Parker here, it’s free for active Edge members.

Sportsman's Warehouse

A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.

Sportsman's Warehouse reported revenues of $331.3 million, up 2.2% year on year. This result met analysts’ expectations. More broadly, it was a slower quarter as it produced full-year EBITDA guidance missing analysts’ expectations significantly.

The stock is down 40.6% since reporting and currently trades at $1.45.

Read our full, actionable report on Sportsman's Warehouse here, it’s free for active Edge members.

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Specialty Retail Stocks Q3 Recap: Benchmarking Best Buy (NYSE:BBY)

Stock Story

Dick's Sporting Goods

+3.70%

GameStop

+1.88%

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Best Buy and the best and worst performers in the specialty retail industry.

The 9 specialty retail stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 2.7%.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Best Buy

With humble beginnings as a stereo equipment seller, Best Buy now sells a broad selection of consumer electronics, appliances, and home office products.

Best Buy reported revenues of $9.67 billion, up 2.4% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.

Unsurprisingly, the stock is down 4.5% since reporting and currently trades at $72.24.

Best Q3: Ulta

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Ulta scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 9.9% since reporting. It currently trades at $589.14.

Weakest Q3: Dick's

Started as a hunting supply store, Dick’s Sporting Goods is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.

Dick's delivered the fastest revenue growth but had the weakest full-year guidance update in the group. Interestingly, the stock is up 1.7% since the results and currently trades at $209.92.

Read our full analysis of Dick’s results here.

Bath and Body Works

Spun off from L Brands in 2020, Bath & Body Works is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.

Bath and Body Works reported revenues of $1.59 billion, flat year on year. This number missed analysts’ expectations by 2.7%. It was a disappointing quarter as it also logged full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

The stock is down 7.4% since reporting and currently trades at $19.48.

Read our full, actionable report on Bath and Body Works here, it’s free for active Edge members.

GameStop

Drawing gaming fans with demo units set up with the latest releases, GameStop sells new and used video games, consoles, and accessories, as well as pop culture merchandise.

GameStop reported revenues of $821 million, down 4.6% year on year. This print lagged analysts' expectations by 16.8%. Aside from that, it was a mixed quarter as it also recorded a solid beat of analysts’ gross margin estimates but a significant miss of analysts’ revenue estimates.

GameStop had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 4.2% since reporting and currently trades at $22.24.

Read our full, actionable report on GameStop here, it’s free for active Edge members.

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