Pull the Plug on This Video Game Retailer

GME is at the top of the list of worst retail stocks to own in November-December

by Patrick Martin

Published on Nov 6, 2018 at 11:55 AM

The holidays will be here before you know it, and that means retail stocks take center stage. However, GameStop Corp. (NYSE:GME) is one retailer to avoid in the coming months, if history is any guide. Below, we outlined 25 stocks that tend to struggle during the holiday season.

According to Schaeffer's Senior Quantitative Analyst Rocky White, GameStop has been the worst retail stock to own from November through the end of the year, looking at data from the past 10 years. Specifically, GME has averaged a monthly loss of 7.91% -- the steepest loss on our list by a landslide -- with just three of those returns positive. 

Worst Retail Stocks Nov-Dec

Should history repeat itself, GME stock, which at last check was down 0.6% to trade at $14.95, would be trading near the $13.80 level. After a post-earnings slide in mid-September, GME has been consolidating below the $15.50 level for the past two months. Overall, the security is down nearly 17% in 2018. 

Daily Stock Chart GME

In the options pits, GME puts have been bought to open over calls at an accelerated clip. GME's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.66 and ranks in the elevated 69th annual percentile. 

Those targeting puts may have to pay up, though. This is according to the stock's 30-day implied volatility skew of 13.1%, which ranks in the 97th percentile of its annual range, meaning near-term calls have rarely been cheaper than puts, historically speaking.

Despite GameStop's struggles on and off the charts, though, many analysts remain bullish. In fact, three of the seven brokerage firms following GME maintain "strong buy" opinions. Should the video game retailer once again slump into the new year, a round of downgrades could add more pressure to the shares.

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