Retail Earnings Recap: TJX Earnings Sell-Off Opportunity & WMT Options Trade

smarter with Schwab. We are back here on Morning Trade Live. The discount retail space has been in focus this week after earnings from TJX and Ross stores, both retailers posting Comp Store's growth for the quarter, with Ross the big winner seeing comps rise by 10%, with TJX reporting comp growth of 4%. Let's check in on the discount retail space right now as to where shares are trading for this Friday. TJX cooling off a bit right now, but the rest are holding up Ross stores. This is the initial reaction off the back of the earnings we got last night. It was good. We're up three and a half right now. Dollar tree is up one. So is Dollar General. So let's go inside out on discount retail. Joining us now is Charlie O'Shea from O'Shea advisors. Charlie. Happy Friday to you. Let's start with some of these discount guys. I mean Ross stores. I mean the market was looking for momentum off the back of a strong Q one. It looks like they got it with some double digit increases here as far as growth is concerned. I mean this was going to be telling as to whether last quarter was a one off. But it looks like it's sustainable. What's that telling you. It's telling me that consumers still looking for value. I mean we're sitting here with fairly high oil prices to say the least. And the consumer is looking, you know, is looking to save money anywhere they can. Ross and I know we'll go into TJX in a minute, but Ross has a bit of an easier model to manage than TJX does because TJX is so diverse with so many different formats. And Ross stays, you know, really stays in its lane. But it just demonstrates that that company and it's it's been like this for a long time. They have been a stellar performer for as long as I can remember, and kind of been in the wake of TJX. And that's not meant pejoratively. It's just that, you know, TJX gets all the plaudits because it's so much bigger. ET cetera. ET cetera. But Ross is an outstanding retailer. And certainly, you know in the world class category it's just you know, it just demonstrates that the consumer it's not hurting. But the consumer is looking for ways to save money when when they can. And Ross is performance is indicative of that. Oh, absolutely. I mean, you know, they're capitalizing on the trends that k-shaped economy, which of course we know Besson doesn't like or doesn't agree with. At the end of the day, the low income consumers, as you say, looking for value. Also, you've got people trading down as well. So moving on to TJX as you mentioned, I mean different kind of reaction obviously. I mean solid numbers. But it looks like that forecast seemed to concern the market somewhat. What is so different about what they're Doing compared to Ross, as you mentioned. Well, again, with that diverse business model and you're selling everything from furniture to towels to, you know, food, TJX is not going to be perfect all the time. And I, you know, I put a quote out the other day that said perfection is difficult to attain and probably more difficult to maintain. And I think the street has gotten used to TJX just not hiccuping, not even hitting a speed bump since since, you know, we got out of Covid and that's just not realistic. They're going to be times where a company is going to pick up a little bit. The assortment is not going to be flawless. The consumer may, you know, may find other alternatives for a short period of time. And that's why retail is not a short game. The best retailers in the world plan for the long term. They're not going to worry and wring their hands like the like the equity markets do over a quarter. That looks a little choppy. They're going to tend to their knitting. And that's exactly what I expect TJX to do. We've seen this movie before with them. And I think the thing will play. It'll play out the back half of the year. In my mind. I know that there's been some concerns out there, but I think TJX will outperform the back half of the year. Okay. Something to keep an eye on. But as far as what happened with Walmart, I mean the headline with the comp sales obviously being the lowest in six years was a little bit sort of eyebrow raising. But if you dig into the numbers, it really didn't look that bad. Charlie. And now sort of pushing the story forward, you've got this kind of tug of war between the analysts who are kind of, you know, having this sort of classic debate about sort of the short term domestic growth and the long term fundamentals here. I mean, can you sort of give us your perspective on what went down there? I mean, many say it was to do with the valuation rather than what they actually reported. I think we talked about this last quarter as well. The valuations gotten pretty stratospheric. You know last quarter it was in the 40s. Now it's in the high 30s. That's pretty high. And that's rarefied air. And I think that in a way puts a lot of pressure on management to achieve the quarter over quarter results that the Street seems to like. I've never been a fan of quarterly reporting. I think I've made that point clear over the years. I don't think the best retailers work that way. I think you have to plan for the long term, and if there's a retailer that's done a better job of planning for the long term than Walmart, I want to meet them because these guys have made strategic moves in the past. They're making them now as well that have just knocked the lights out. You know, this acquisition of vibe is not the same as, you know, the moonshot with jet, but it's indicative of how innovative and creative this company can be. 2% comp okay, we've got 700 billion in revenue. I'm not real good at math, but that seems pretty good to me on a dollar basis. And when you look at last year was in the mid 40s. The year before was in the mid 40s for the second quarter. 2.5% is nothing to sneeze at, especially in this environment, especially when they've rolled back 11,000 prices since the beginning of the year. And that's going to flow through. It's going to hurt your comp now, but you'll gain more customers and that will flow through over the longer term. Yeah. I mean, they've had to be pretty adaptable in this kind of environment as well. But Charlie, really appreciate the breakdown. Thanks so much for all of that. Charlie O'Shea. O'Shea advisors, appreciate your time. Let's trade Walmart now with Tom white, host of Fast Market. Good morning Tom. Tough day yesterday. We continue to see it under pressure again today. Just walk us through an example trade. Yeah down double digits as far as percentage move goes and hit nine month lows in today's session just above 102 bucks a share. So it's been under pressure to say the least. Those comps that came in at 2.6%, far below what the Street anticipated. You know, they were pretty upbeat on the conference call, but at the same time, they lowered guidance for the current quarter while just getting in line for the full fiscal year. So inflationary pressures hurting. And then you got to think about the forward valuation. That's what I think has been hitting the stock. So I looked at a strategy. You know you could buy the shares here on a steep discount to where they've currently been trading. But maybe you just want to profit if it doesn't pull back even more. Or if it does, you'll get to buy the shares at a cheaper discount to where they're currently trading. So I looked at a cash secured put here and I went out to the September 11th weekly cycle. So 21 days to expiration. I'm just selling an out of the money 100 strike put. You're going to collect a credit of roughly about a dollar per put that you sell. So there's what you can make $100 per put that you sell. But the idea here is that if the stock continues to move down and goes back below 100, if you collect that dollar credit on each put, you sell, your break even goes down to $99. That's over 3% below the current share price. So you'd be buying the shares at $99 as opposed to buying the shares outright here, just above $102 a share. So that 3% discount. Now, if the stock doesn't go below 100 over the next three weeks, then you just get to keep that $100 credit that you collected on this. So it's a two fold type of position where I'm looking to buy the shares if it does fall further. But if it doesn't, I can still profit because if you think about it, Sam, if you put a bid in for $99 on the shares of stock where you want to buy them, you might not ever get filled on those, right? This allows you to participate in profit if it doesn't fall, but if it does, you're willing to buy the shares at $99 at over a 3% discount to where they're currently trading. Sam. Tom, thank you so much. Walmart continues to be under pressure, as