US Retail: Trading strategy - Does it pay to buy Retail stocks at optically cheap valuations?

Bernstein's US Retailing Broadlines & Hardlines trading strategy report back-tests whether it pays to buy retail stocks at optically cheap valuations. Using data since 2000, it buys coverage stocks whenever their NTM P/E expands/contracts beyond one standard deviation of the 5-year trailing average, and compares 1-, 2- and 5-year holding-period returns with the cap-weighted S&P 500. Of ~1,000 buy signals, 566 were "expensive" and 441 "cheap". Over 12 and 24 months, buying cheaper generates greater relative returns, but the advantage dissipates over 60 months, after which fundamental stock calls matter. For Mass/Club, higher-quality compounders trading at more expensive valuations tend to get more expensive over time (Costco, Walmart), so "expensive" signals outperform over 5 years; lower-quality names like Target have significant multiple volatility where buying cheap has been profitable; dollar stores show range-bound multiples, with the 2023 collapse weighing on 5-year returns;