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These factors have buoyed investors’ optimism about the retail space over the past few months. This is evidenced by the SPDR S&P Retail ETF’s (XRT) 70.5% returns over the past six months versus SPDR S&P 500 Trust ETF’s (SPY) 21.4% gains over this period.
However, many retail stocks have moved too far too fast based solely on investor optimism, and their financials and growth prospects don’t justify their current price levels. With weak fundamentals and growth prospects, Lululemon Athletica Inc. (LULU), V.F. Corporation (VFC), Burlington Stores, Inc. (BURL), and Burberry Group plc (OTC:BURBY) currently look overvalued. So, we think they are best avoided now.
