Frank is out of the office on a research trip… leaving me, Daniel, behind the mic.
Target’s (TGT) shares are near 52-week lows after it announced it will be closing nine stores due to rampant theft. It’s a troubling sign that will have a big impact on local economies. I highlight how it’s the latest example of the problems that happen when politicians enact stupid policies… why long-term investors should be excited by the declines… and a few other retail stocks that belong on every investor’s watchlist.
Two weeks ago, I ruffled some feathers when I shared my contrarian view on global warming. I’m doubling down this week… and sharing some more research from experts who disagree with the popular climate narrative. Email me your thoughts.
“Carbon capture” is one of the trendiest ideas for mitigating climate change (and it’s so popular, I’ve created a drinking game around it). While I think it’s a silly idea, it will benefit a handful of companies in the energy sector. I reveal two of my favorite stocks to play the situation… and explain why the world can’t stop using fossil fuels anytime soon.
- The politics behind TGT’s store closures [2:00]
- The best retail stocks for long-term investors [10:55]
- I’m doubling down on my climate stance [14:25]
- A drinking game to help combat climate change [18:20]
- My two favorite plays on carbon capture [23:20]
Wall Street Unplugged | 1077
Politics are to blame for Target's store closures
This transcript was automatically generated.
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.
Daniel Creech: How’s it going out there? It’s Wednesday, September 27th and you’re listening to the Wall Street Unplugged podcast.
No, there’s nothing wrong with your listening device.
Do not tinker with anything.
All is normal.
The one and only Frank Curzio is outta the office.
If we were in the news business, we would say that he is on assignment.
He is actually conducting boots on the ground research and he will tell you all about that when he’s back in the office in a few short couple of days.
That leaves me Daniel Creech, Research Analyst here at Curzio Research.
I’m the one that works for alongside behind and with the one and only Frank Curzio.
Great to be here.
My pleasure to fill in today.
I wanna talk about a couple of very important topics.
There is no better example of when policy and politics meet economics with the Target, or many of you refer to it as Target, the retailer is in the news.
So we’ll discuss all of that in the closing of stores.
And then I want to piggyback and pick up on another topic.
A couple of weeks ago when I filled in for Frank, I talked about a contrarian view of scientists against the global warming and end of the world narrative.
And I will update you on that.
Wonder if I got duped or fooled with some fake news and did I go on and carry it on? Of course not.
Don’t worry about that.
Spoiler alert, I will give you some names of some people to follow, some things to think about and then also some investing ideas because that’s what we do.
We look through economics and politics to find out the best ideas to position you and your family to make change for you and yours because that’s how it’s done.
People not from the top down like those pointy shoe wears in Washington tells.
Let’s get right into it.
This is from C N N business today.
It’s all over the news.
The last couple of days.
Target announces it we’ll close nine stores and major cities not because of issues with foot traffic or supply chains or difficulty in getting workers.
No, no, no, no, no.
This is serious people.
This is simply because of theft and organized crime.
There are some wild stats here and Frank and I have talked about this over the different earnings conference calls as retailers have warned not only about high inflationary issues that we all know about and are dealing with right now, but also with the lower income consumers getting stretched, getting hurt by higher prices.
We have credit card debt hitting an all time high.
We’ve talked about these several warnings or red flags out there and now you have this coupled with this organized crime and it’s really starting to squeeze on not only margins but business impact.
And what I wanna talk about today is even more than that and the psyche and the way that this plays out from different perspectives of the economy.
And because sometimes Main Street and Wall Street are aligned and kind of they’re moving together.
Either the economy’s good main street’s, good stocks are going up, but sometimes stocks can go down while Main Street’s positive and vice versa.
Like we’ve seen during the COVID markets went to all new time highs while the economy was literally shut for most people.
So it doesn’t always have to make sense.
Now let’s, let’s look at this.
Let’s just talk about what’s going on and then we’ll dig through this from a couple different perspectives.
CL target is announcing its closing nine stores across four different states because of theft and organized crime.
Now, some skeptics say as quoted in the C N N business that they may just be exaggerating the issue.
This is a quote from Target.
It says, we cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests and contributing to unsustainable business performance.
We know that our stores serve an important rule role in their communities, but we can only be successful if the working and shopping environment is safe for all.
Now this article goes on to opine that it’s not clear whether crime is growing significantly more serious.
Well, I doubt that.
See, this is, this is the perspective, one of the perspectives I wanna talk about.
We have this anti-capitalism mindset, this anti-big business mindset.
So Target’s gonna exaggerate the theft in the Q one and Q two earnings results for Target.
They warned in Q one they warned that they’re going to lose, um, This article at least does a good job.
The C N N I give them some credit for talking about the National Retail Federation.
The industry’s largest trade group said Tuesday the average shrink, which is the industry term for theft, average shrink damages, fraud, theft, other reasons cost retailers $112 billion in losses in 2022.
That’s up from 94 billion in 2021.
Alright, so well over 10% increase.
The group said the average shrink increased in 20 22, 1 0.6 up from 1.4 the previous year.
Now the wild thing here is we have $112 billion in losses and many in the political realm just think, well that’s a problem for that retailers and they ought to just absorb that cost and go on as normal because this article even touches on the fact that hey, when you have have times of high inflation, everybody’s got to eat.
So theft is just a part of it.
And, and that is a scary mindset because you are giving into a lawlessness that is going to destroy the economy.
And so let’s look at this from a couple different perspectives.
One from the greedy business standpoint of Target.
Alright? Your stores are under performing.
Your liability of risk for your employees and your customers suppliers and such don’t wanna come to you.
Your area is terrible.
So you close down the store.
Now, if you’re an employee at this store, that’s terrible because if you have the option to relocate, you hope there’s a store very close to you.
But in reality, if you have to drive further, then that increases the wear and tear on your vehicles or public transportation.
However you get around the cost of gas, especially in some of these Portland, Seattle, San Francisco, Oakland, the price of gas is much higher than the average across the United States.
So that weighs in on you.
Not to mention just the mental stress and the difference.
You know, any change can be difficult.
So your employees are very stressed out on this.
Your management, everybody in the store is going to lose a job or an opportunity.
The state, that’s one perspective.
The consumers are gonna have to pick a new store, which it sounds like if crime is so bad, that’s not a big deal.
They’re obviously choosing different, they’re voting with their feet and going different places now or else Target wouldn’t continue to operate at a loss and then shut this down.
The local state and governments are gonna miss out on massive taxes.
So if Target didn’t own that specific real estate, if they leased it, whoever owns that building is gonna lose out on revenue that’s gonna filter through and lose out on more ta.
Tax loss revenue.
And don’t misunderstand, I’m not saying because Target is closing nine stores, 1, 2, 3, 4, 5, 6, 7, 8, 9, that the economy is teetering that California is going off into the abyss or anything like that.
Please don’t misunderstand, but I do want to share because the story is everywhere and it’s a great snapshot of how policies and lack of policies have a filter or have an impact and a massive impact on everybody in the economy.
And so from, from the state and local governments are missing out on tax revenue.
Now you have this huge target store that’s going to be empty.
Do you think in a area that’s already been blamed of high crime and Unsafeness is going to get better as a big box retailer leaves or worse? Well, I don’t think it’s a big stretch to think it’s worse.
So it’s a negative for all those.
What about from a stock perspective? What about from the greedy capitalist perspective? Well, let’s look at Target here.
This is Finvizz, just a free website and as you can say, this is a daily chart going over the last year.
Target shares are absolutely falling down.
You don’t wanna see this moving to new 52 week lows.
If we switch to a weekly chart, meaning the timeline, this goes all the way back to the end of 2021 on the left side of your screen, each bar that you see on your screen represents a week and then a monthly, chart as well.
Now, from the monthly stand standpoint or from the chart, it looks like this target is dead set on going down to a hundred or going all the way down to this 200 moving average.
a popular tool watch for by traders and such.
So this has a little bit of a gap to fill here, but I would start looking at possibly buying shares of target around here because a, let’s think about this.
The risk of target going out of business is very little.
Uh, they’re gonna weather this storm, multi-billion dollar, billions in sales, billions in cash flow.
Yes, the stock is getting hurt.
We’ve been wrong on this.
In Curzio Research Advisory.
We were way up because Frank hit this timing out of the park with the COVID lockdowns and such like that, we have collected over $7 in dividends.
So that offsets the paper, capital gains loss that we’re showing right now.
But essentially the, the idea of the worry that this is going out of business should not be on the table.
That’s not happening anytime soon.
And from a investor standpoint, when you cut cost, when you rearrange your efficiencies, that’s good for the stock price.
Your margins are gonna go up because of this crazy, because of the crazy policies that we have in place, which is you can steal up to a thousand dollars or damn near a thousand dollars in certain areas and not be prosecuted, not get in trouble when you have those situations in place and you are shocked or surprised by babe, bad behavior continuing.
I just think that’s a very naive and I think that the easiest thing to do that without pulling out your hair, the way to understand that is that listen, these policies are enacted and done on purpose.
I hate to think that some people want anarchy, but the point of it is, and the reality is you have to focus on what is in place and what is going to happen from those policies in place.
When you encourage people through lack of discipline and holding them accountable of stealing, when you encourage others to just take what they want and there is no rule of law or private property, then this is kind of stuff you get.
Now the downside is to this is that Target is getting absolutely hammered, but who’s winning? Well, dollar Tree, you’d think maybe they’ll go to other, um, lower end retailers.
’cause tar is a higher end retailer.
Dollar Tree is actually getting taken out to the woodshed.
You can see that’s falling to new 52 week lows.
That’s Dollar General, excuse me, dollar Tree is also getting hurt trading near 52 week lows.
At some point I would put all these on your radar because the higher inflation mindset environment that we’re in is not slowing down any anytime soon.
Which means that regular consumers continually going to be squeezed and have to make decisions between how to allocate and stretch their monies as far as they can.
Prices are continued to go higher.
Dollar Tree is getting tanked as well.
I would look at this overall.
I’m not saying these are good buys, but one that is clearly a buy right now and is working is the mighty Walmart I just showed you.
Target Dollar Tree and Dollar General trading near or at heading towards new 52 week lows.
Yet Walmart is reversing that in just a few dollars off of its recent 52 week highs.
Why? Well, because they’re managing everything a lot better.
They’re a different, they different.
They cater to a different population.
Of course this is more of the savers target is up more of a higher end shopping experience.
But the point is, is that when you look at from the business perspective, the sad thing is is that policies or politicians are going to blame these cre greedy corporations for closing up shop.
And they’re gonna say that they’re just greedy and want to focus on margins and money, yet they’re totally ignoring the reality and their own problems, which is the policies.
It’s not rocket science to think, to tell people not to steal.
I understand inflation is high and everybody has to eat, but let’s attack the problem on why inflation is high.
Let’s talk about maybe the money printing or the government lockdowns or the stimulus checks and what actually adds to inflation.
Not just blaming those who, who um, have to operate in the environment and make tough decisions in the way that people just gloss over this $112 billion in theft across retail.
And this isn’t just Walmart, this is Walmarts and Targets and everybody in retail from higher end.
You’ve seen the videos that go viral on social media about these organized crime and these groups of kids just going in and ransacking Apple stores and Louis Vuitton and all this kind of stuff.
It’s absolutely crazy and sad and it’s policies and that’s what I wanna make sure and drill into your guys’ head, this wonderful audience of you guys, you thinkers, you investors out there because it’s the policies and it’s just like similar with minimum wage policies.
You know, every job at Walmart is not worth 20 or $30 an hour.
That’s not racist, bigoted, angry.
That’s not looking down on anybody.
That’s just the way the reality is, you know, if I were to go to Walmart and offer to sweep the floors or wipe down the shelves, that’s not worth $30 an hour.
I’m sorry, it’s not.
And that’s okay.
The problem with policies that impact stuff like this is like, just like with minimum wage, when you set standards, it’s going to cause prices to increase because you have to let the economy figure that out.
You have to let the market understand and find and realize prices for both consumers and businesses.
It’s a, it’s not a perfect art.
It’s, it’s a gray area, but it’s much better than the than the forcible hand that gives you these, these pick these government policies that pick winners and losers makes it very difficult.
But these businesses aren’t going anywhere.
Anytime soon, start digging into the ones that have gotten beaten up.
Get a little exposure to Walmart because it shows no signs of slowing down and pay attention to policies because that’s what affects us in the economy and that’s what we’re most passionate about here and how to help you out.
Alright, we are switching to topic number two and I have to recap a couple of, I have to bring a little bit, you guys up to speed here.
So two weeks ago when I filled in for Frank Curzio, I brought up this wonderful fun climate declaration from this group that there is no climate emergency.
And this is back from August.
I just shared it a couple weeks ago.
Go back to, um, the Wall Street Unplugged podcast to catch what I said about that.
And the reason I bring this up is because a couple people have emailed me, continue emailing, love me, hate me, just don’t ignore me, daniel@Curzioresearch.com, that’s email@example.com and they said, Hey, we’ve seen some fact checks articles about this over the internet and this is, this is fake news.
This is not real.
This is old.
It’s back in August, some of these signers that there’s over a thousand now.
It keeps going up.
Uh, the signers of this declaration or this anti humans ruining the earth is fake news.
Some of the guys are dead, they’re not all scientists.
They take money from big oil, yada yada yada.
That’s all well and good.
I decided to share this.
I didn’t know exactly about this.
I’ve done more research as I said I would.
And if you just look at this, this is clintel.org.
Climate Intelligence Clientele is an independent foundation that operates in the fields of climate change and climate policy.
And they name the gentleman here.
And I don’t know these guys from Adam, I admit they do have some news articles about here.
And this is going to just as a warning, this is gonna upset everybody that is in the world is ending camp the AOCs and John Kerry’s and that Greta spokesman young woman overseas that is just giving her all to, to saving the world.
Uh, this headline will upset a lot of people for thinking the world is ending because it’s timely.
Just yesterday on the 26th of September, the headline reads, world’s largest reef secretly recovers and has record High Coral cover two years in a row.
Alright, now this is just open season for, hey, this is fake news and whatnot.
And that’s fine.
Now because of our wonderful network and incredible base of subscribers, about a year ago or maybe over a year ago, we were talking about climate change and such.
And a subscriber emailed me a great podcast, or excuse me, a great email with some podcast links and different people.
And I started diving into those and I’ve listened to a few podcasts a couple of times and here’s a few names to just throw in a search engine.
And then just like all algorithms from x, formerly known as Twitter, YouTube, et cetera, if you click on somebody, they’re gonna show you like-minded people or things.
You know, if you’re on YouTube and you listen to rap or country, your next song and suggestion’s probably gonna be rap or country.
So Patrick Moore, who is a PhD, I’m not gonna bother to give you all the accolades, but Patrick Moore, Steve Malloy and Alex Epstein.
Not that Epstein, that JPMorgan just had to settle $75 million for.
Don’t worry about that, we’ll get to the Banksters tomorrow.
But this Patrick Moore has a couple of, recent books.
He’s got several books and he is got a free P D F that I just downloaded and started to go through.
And the free p d F is the positive impact of human c o two emissions on the survival of life on earth, c o two, and the survival of life on earth and the positive impacts of it.
Completely contrary contrarian to what you hear his audio book, which they’re darn proud of ’cause I just bought it for about $18 is fake, invisible catastrophes.
Catastrophes and threats of doom.
Both good clickbaits, you gotta like that for the media age we live in.
The point here is to tell you that I hope to encourage you guys to think about different things about thinking about climate change, about man made climate change.
If what we’re being told is real, is it going to be as impactful or not? And I want to introduce a new drinking game because what you’re going to hear about a lot over oil and gas is this carbon capture theme.
And to prove some data and have some fun with this, this is from oil price.com.
Now this is earlier in September, but Amazon buys carbon credits and its first investment in direct air capture.
Now the footnote version of this is what are carbon credits? Well, just like John Kerry likes to speak about from his private jet, they’re allowed to do anything.
They beating the power, those in power can do whatever they want, travel and all that.
But we have to worry about our climate footprint.
We have to worry about our air conditioning, which as you can tell, it’s hotter and heck in here.
We have to worry about keeping our air conditioner up, not traveling on private plane.
And if we do, if we run factories or want to use electricity, we must invest in climate changing carbon credits, which is basically a scam to justify and make you feel good about you being able to do whatever you want, telling others what to do and then saying, Hey, I’m making up for it.
It’s just like saying, listen, I just chopped down a tree, but I planted two over here or on the other side of the world.
You’ll never hear about ’em.
You’ll never see ’em, but just take me at my word.
I have good intentions, results don’t matter, only intentions and the polling at heartstrings.
So Amazon, the mighty Amazon who probably is trying to front run the, F T C monopoly charges against them.
And this is just saying how, hey, they’re gonna throw money at c o two to get rid of c o two because it’s killing the world and all of us as we breathe now.
All right, that’s kind of fun.
but check this out.
In a world where clear is mud, shell shell the big oil and gas producer withdrawals its ambitious plan to allocate a hundred million dollars annually for carbon credits.
Now, important note here for our game, I didn’t say whether or not they had to buy ’em or quit selling ’em.
We’re just going to have a fun drinking game anytime it’s mentioned and buck up people because you’re gonna have to get a heck of a tolerance for what’s coming down the pike as we hear more about this climate stuff.
So on one hand you got Amazon playing the game and walking the tightrope, you got shell in the middle of oil and gas like the ExxonMobil’s and everybody running away from it.
Why is this important? This is important because we’ve been very bullish on oil and gas here and we have some excellent stock picks to do.
I’ve been wrong, I’ve gotten wrong on Devon Energy and we stopped out of that.
However, the reason it don’t feel like you’ve missed the move in oil and gas don’t feel like it’s too late.
And what I want you guys to think about, I have fun making fun of carbon credits and policies and things like that, but it’s not because I’m totally disagreeing with anything related to climate change.
And my main takeaway here is that you guys think about this for yourselves.
Think about those saying the world is ending.
Think about those saying the world is not and position yourself accordingly because what I believe is going to happen or what I know will happen, I just don’t know exactly when yet.
And I’ve shared some reports from ExxonMobil looking out to 2050 and they were talking about how they ExxonMobil believes that wind and solar is going to account for 11% ish, give or take of global energy, um, supply that’s in 2050.
That’s a significant increase.
My point is between now and then each passing year, we’re gonna realize that the cost, the efficiency, and the transition from fossil fuels to just clean energy is not going to happen at the pace that people are telling us.
And what does that mean? That means there’s a tremendous opportunity.
Oil stocks continue to be cheap.
Many are trading for a price to earnings multiple of under 10 and still growing.
To put that in perspective, the average market, the average stock in the market is trading at a 16 or 17 PE.
So energy, despite its massive run higher is still very cheap compared to the overall market.
And I wanna share this wonderful stat.
This is one of my all time favorite charts because it shows global oil demand worldwide.
And as you can see this, even during the recession, the great financial crisis crisis of 2008, 2011, oil on an annual consumption basis barely dipped.
The only meaningful dip it had was in 2020 when as I highlighted on the screen here, the economy was locked down.
Literally the government stopped in.
That’s the only time that global oil demand actually pull back in a meaningful way, which means because of our, again, going back to this, policies we’re not, the US is doing great in drilling, but we don’t have the policies in place to really put the pedal to the Metal to drive down oil prices.
And my point here is that when the market, when the overall market starts to understand that the goals that policies, um, that governments are in place and talking about right now will not happen.
We will not get to those transitions in any meaningful time.
There’s gonna be a massive repricing in energy markets and those stocks could really take off from current levels.
What kind of stocks am I talking about? Well, let’s switch over here.
And Denbury is trading near 52 week highs.
These guys are one of the leaders in carbon capture.
Occidental Petroleum, which is O X Y is the ticker.
D e n is the ticker for Denver Occidental Petroleum Corp.
You can see this has been nicely range bound from 66 50 all the way down to about 60 or 56 to 58 down here was when Warren Buffettt was continually buying handover fist, fist.
I believe they own over 20% now off the top of my head.
But they’re big into carbon capture.
And they were also in the news about not, they’re not going out and drill, baby drill just because prices are higher.
Oil and gas companies have found religion in financial senses.
These guys are much more financially strong than they have in past booms and bus cycles.
They’re rewarding shareholders through dividends, through buybacks, and they’re actually paying attention and being frugal with their money.
It’s actually a great thing overall.
Now you have Occidental Petroleum, you have Denbury, you can look at most oil and gases, look at offshore.
I want to give you a guys, um, look at your big boring stocks, ExxonMobil.
It wouldn’t surprise me to see the Exxons or Oxys or anybody like that make an acquisition for this carbon capture type deal because they have to play along with the narrative and the game.
But the overall takeaway is oil prices are gonna continue to remain elevated.
They’re already above $90 a barrel, a massive run from the sixties just a couple of months ago.
I’m a big oil bull.
I don’t think oil is going to go to 120 anytime soon and stay there.
But if, if oil doesn’t turn around and reverse and go back into the sixties or at least the low seventies very quickly, by the time the next inflation data comes over, the next rolling few weeks, inflation is gonna continue to be all around the place.
It’s not going to continue lower as we’ve already seen in a smooth situation.
So investors must, must pay attention and allocate accordingly.
Right now, inflation is great for oil.
It is driving the, it is controlling the Fed.
Now they don’t wanna admit it the Fed, but it is.
And unless since there’s no policies in place to change that, I want you to make sure you’re allocated accordingly.
So, alright, so look at Denbury, look at Occidental Petroleum.
Continue thinking for yourselves and be open-minded, be skeptic, be everything.
Email me firstname.lastname@example.org.
Don’t miss tomorrow’s Wall Street Unplugged Premium episode where I will dive more into the carbon capture stuff.
I’m going to explain a little bit more oil and gas, why those upside potentials in a couple different stocks are absolutely great risk reward opportunities.
Also, there’s a great piece out of the Heritage Foundation on, well, I’m gonna continue on this on, we’re going to continue to see very muddy, muddy and murky economic data going here forward.
There’s a real easy explanation as to why government spending and I will dig more into that on tomorrow’s podcast.
Plus give you our latest weekly pick all that and more.
We’ll see you tomorrow.
Frank will be back next week everybody.
Thank you for tuning in.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility.