High-end retail stocks show signs of more upside

Pedestrians pass in front of a Nordstrom Inc. store in the Midtown neighborhood of New York, on March 20, 2020.

Gabby Jones | Bloomberg | Getty Images

High-end retail stocks have made strong gains in recent months, and recent trading activity could be signaling more upside on the horizon, CNBC’s Jim Cramer said Tuesday.

“The non-essential high-end retailers have already run, but the charts, as interpreted by Bob Lang, suggest that Capri Holdings, Tapestry, LVMH and Nordstrom could all have more upside here thanks, yes, to the stimulus checks,” the “Mad Money” host said.

Lang, the founder of ExplosiveOptions.net and a contributor to TheStreet.com, is a trusted technician that Cramer relies on to get a read on the state of the market.

Cramer noted last year was the biggest period of retail failures in history, as coronavirus lockdowns and restrictions put a dent in the brick-and-mortar retail landscape.

As the U.S. carries out its Covid-19 vaccination campaign and guides closer to a full economic reopening, those businesses that outlasted the damage could be in a position to benefit from another round of relief spending that includes a third distribution of direct payments to most Americans.

“This whole group was running out of gas a couple weeks ago, then Congress agreed to pump $2 trillion in [the economy] and now they’re looking at another leg higher,” Cramer said.

Capri Holdings

“Lang thinks this is the kind of stock that gets overbought, but instead of being fearful he says it stays overbought,” Cramer said, “meaning he sees that it could revisit the old highs.”

Tapestry

  • Parent of Coach, Kate Spade and Stuart Weitzman
  • Stock is up 51% in past three months and within dollars of its 52-week high
  • Moving average convergence divergence (MACD), a trend momentum indicator, recently made a bullish crossover
  • Chaikin Money flow is strong

“When the stock pulled back to its 50-day moving average back in January, that was your chance [to buy it] … Lang thinks Tapestry’s a quiet leader with more room to run,” Cramer said. “He’s more bullish on Tapestry than I am.”

LVMH

  • Parent of Louis Vuitton, Hennessy and Christian Dior
  • Stock is up 8.25% in past three months and within reach of its recent high
  • Has spent months trading sideways, creating a coiled spring situation that tends to lead to an uptrend
  • MACD made a bullish crossover, institutional investors are buying

“Lang’s betting the big boys are not done” buying the stock, Cramer said.

Nordstrom

  • Stock is up 45% in past three months
  • The 50-day simple moving average crossed over the 200-day moving average in December, a bullish signal
  • The bullish crossover is known as a “golden cross”

“Lang points out that the MACD is flashing a buy signal right now, and it doesn’t hurt that the last quarter came in spectacularly better than expected,” Cramer said. “Lang’s betting it could make a run at its 2018 peak, up about 50% from here.”

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