Morningstar Advisor - February/March 2012 - (Page 32)

Sector Rap Specialty Retail: Ad Hoc Opportunity By Philip Guziec Each specialty retail segment is not like the others; our analysts have scoured the industry’s credit offerings to find the best deals. On Dec. 19, I sat down with some of Morningstar’s specialty retail analysts— Liang Feng, R.J. Hottovy, Joscelyn MacKay, and Peter Wahlstrom—to discuss the state of that sector and the credit offerings therein. Morningstar launched corporate credit ratings in 2009 and now offers ratings on more than 700 of the largest corporate debt issuers in the world. In addition to credit ratings, Morningstar analysts also publish company reports, lists of bond investment recommendations, industry reports, and their opinions of new bond issues. In 2012, Morningstar plans to launch municipal-bond research as well. Philip Guziec: Obviously, you can’t really look at specialty retail in aggregate—every subindustry is completely distinct—but that’s what generates investment opportunities. It looks like you’re pretty excited about home-improvement retailers. Can you give us the lay of the land in that industry, given what’s happened over the past five years? Peter Wahlstrom: Over the past decade, Home Depot HD and Lowe’s LOW have basically doubled their square footage. These companies are now looking to improve their productivity and profitability within existing store walls. This makes sense in that you also have, with the housing downturn, fewer people spending on residential construction. Commercial construction is still a driver of the business, but these companies now want to encourage general merchandise, day-to-day traffic, and smaller repair/remodel projects. In the meantime, Home Depot and Lowe’s 32 Morningstar Advisor February/March 2012

Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2012

Morningstar Advisor - February/March 2012
Letter From the Editor
Make a Difference Stories, Not Debates
How Concerned Are You About Europe?
Analytical and Independent
What to Ask When a Fund Manager Leaves
Past, Present, Future
Have Financials Gotten Cheap Enough?
Four Picks for the Present
Investment Briefs
Tactical Funds Miss Their Chance
Specialty Retail: Ad Hoc Opportunity
How Europe Is Making Its Crisis Worse
Impact on U.S. Economy Will Be Minimal
European Banks: Bargains or Value Traps?
Don’t Count the Euro Out Yet
Europe on the Brink
GoodHaven Realizes Its Vision
How Index Trading Increases Market Vulnerability
Nonlisted REITS: Handle With Care
Safety Picks for the Many Moods of Mr. Market
On the Prowl for Large- Blend Index-Beaters
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Math That Matters

Morningstar Advisor - February/March 2012