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Labor Day Stock Sale: 2 Dirt Cheap Stocks to Buy Right Now | The Motley Fool

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  Published in Stocks and Investing on Monday, September 1st 2025 at 8:13 GMT

Labor Day Stock Sale: Two “Dirt‑Cheap” Picks to Grab Before the Sales Begin

Every September, as summer winds down and the Labor Day weekend rolls around, retailers line up deep discounts to clear inventory. While consumers line up for savings, savvy investors line up for bargains. That’s the premise of the Motley Fool’s recent “Labor Day Stock Sale” feature, which spotlights two “dirt‑cheap” stocks that the authors believe are undervalued and poised for upside in the weeks that follow the holiday sales surge.

1. Skechers (SKX)

Skechers has long been a favorite of the Fool’s value‑seeker community. The company’s stock price, which slipped from a peak of about $21 a few months ago to roughly $10 today, offers a “dirt‑cheap” entry point for investors who believe the brand’s fundamentals still hold strong.

Why the stock is undervalued

• Resilient demand: Skechers’s global footwear sales rose 5.4% in the most recent quarter, powered by both its “Skechers USA” and “Skechers Worldwide” divisions. While the company’s sales volume has dipped slightly, the brand’s pricing power and international growth help cushion the blow.
• Margin expansion: The firm posted a 1.6% rise in gross margin year‑over‑year, a sign that its supply‑chain efficiencies are paying off. Even with the slowdown in domestic sales, its operating margin climbed to 12.1% from 11.8%.
• Healthy balance sheet: Skechers has a modest debt‑to‑equity ratio of 0.34, well below the industry average. Its cash‑conversion cycle is shrinking, giving the company room to reinvest or return cash to shareholders.
• Competitive positioning: While the footwear landscape is crowded, Skechers has carved a niche in lifestyle and athletic‑style categories. The brand’s partnership with athletes and its focus on “performance‑style” shoes gives it a distinct edge against competitors such as Nike or Under Armour.

What the article highlights

The Fool’s piece notes that Skechers’ stock price has dropped “over 50% from its 12‑month high,” and that the company is trading at a 6.8× forward P/E—well below the 12‑to‑15× range typical for the industry. The article points out that the company’s dividend policy remains unchanged, and that the share price is currently low enough that a modest rebound in sales volumes could deliver a quick upside. The authors suggest buying Skechers as a “long‑term value play” and then holding through the Labor Day sales to capture any price appreciation.

2. Macy’s (MC)

The second “dirt‑cheap” pick is Macy’s, the iconic American department store. With a stock that hovered at $30 in 2023 but now trades near $14, the article argues that Macy’s is a hidden gem for investors who are willing to bet on the recovery of the retail sector.

Key fundamentals

• Earnings rebound: Macy’s reported earnings per share of $0.27 for the most recent quarter—up 45% year‑over‑year—despite a 7% decline in same‑store sales. The company attributes the improvement to lower inventory levels and a shift toward higher‑margin categories.
• Cost control: Operating expenses fell 4.5% year‑over‑year, while the company’s cost‑to‑sales ratio slid from 63% to 59%. This cost discipline is expected to translate into higher operating margins, currently 10.3%.
• Strategic realignment: Macy’s is shedding non‑essential store locations, investing in digital platforms, and expanding its private‑label offerings. These initiatives are projected to reduce overhead and drive incremental revenue.
• Debt and liquidity: The retailer’s debt‑to‑equity ratio sits at 0.28, while its cash on hand plus marketable securities total $1.9 billion—adequate to sustain operations and support share buybacks.

Why the article calls it dirt‑cheap

Macy’s is trading at a forward P/E of 6.5x, which the authors compare to the 9‑to‑11× range typical of the broader consumer‑discretionary group. The article highlights that the stock’s price decline of more than 50% over the past year offers a buying opportunity for value investors. The authors also note that the retailer’s “Labor Day sales” are expected to lift foot traffic and boost online sales, offering a “price‑sensitive” window to capitalize on the stock’s undervaluation.

The Bigger Picture: Labor Day as a Catalyst

Both stocks are positioned to benefit from the surge in consumer spending that follows Labor Day. The article argues that sales events help retailers clear inventory, improve inventory‑to‑sales ratios, and, by extension, improve profitability. In the case of Skechers, this could mean higher volume and margin expansion; for Macy’s, it could translate into stronger same‑store sales and better cost control.

The authors encourage readers to adopt a “buy‑and‑hold” approach. While a short‑term price bump might occur immediately following the sale, the article stresses that the real value lies in the company’s fundamentals and the upside potential that arises from sustained profitability and efficient operations.

Bottom Line

• Skechers – 1‑6× forward P/E, resilient demand, margin growth, solid balance sheet.
• Macy’s – 6.5× forward P/E, earnings rebound, cost control, strategic retail transformation.

If you’re looking for a “dirt‑cheap” entry point that aligns with the seasonal buying momentum of Labor Day, these two stocks could fit the bill. As always, perform your own due diligence and consider how each company’s risk profile aligns with your investment horizon. Happy hunting!