Buy This, Not That: Meme Stock Mania Strikes Again

Shah Gilani|July 23, 2025

The meme stock crowd struck again yesterday.

Kohl’s – yes, the department store – exploded 37.62% higher in a single trading session.

Why the massive move?

Simple: 66% of the company’s floating shares had been shorted. When Reddit traders discovered this juicy target, they pounced with call options and buying pressure.

The result was a classic short squeeze that sent the stock rocketing from around $10 to over $14 in one day.

But here’s the thing… Kohl’s fundamentals are absolutely terrible. We’re talking about a company with…

• A measly 0.75% profit margin
• $7.37 billion in debt versus just $153 million in cash
• A dividend they have to borrow money to pay

So while retail traders may have had a great day, this isn’t an investment. It’s pure speculation.

If you want exposure to the retail space, there’s a much smarter play that has $23 billion in revenue, sustainable cash flow, and a real 6% dividend yield…

Click on the thumbnail below to get the full story in this week’s Buy This, Not That.

Transcript

Hey, everybody. Shah Gilani here with your weekly BTNT, as in Buy This, Not That. Yes, I couldn’t resist today because guess what happened on Tuesday? I think if you were paying any kind of attention – maybe you weren’t, but if you were paying close attention to the market and all the stuff that’s going on – you noticed something on Tuesday.

Yeah, Kohl’s, the department store, symbol KSS.

Yeah, people, for those of you who aren’t aware what Kohl’s did, let me tell you. Kohl’s – and I’m going to have to show you a chart on this because this makes it fun – Kohl’s people went through the roof up a whopping 37.62%. Check this bar out, people.

Yes, the stock turned around off of its bottom, was moving up, and then boom, bomb. Guess what? Meme stock status. So is Kohl’s a buy?

People are calling me up saying is Kohl’s a buy here? I own Macy’s. Should I sell Macy’s? Should I buy Macy’s?

Because it’s had a pop today. Which one should I buy? Kohl’s or Macy’s? Oh my goodness.

Let me tell you first of all about Kohl’s. So Kohl’s, guess what? Kohl’s is down from around $29. Okay, that’s close to its all-time high.

$29 and change around March 2024. Okay, and then it dropped to $6.04 on an intraday low people down here. So a pretty steady downward climb from $29 and change down here on this bar here and we’re talking April 4, 2025. So, one year later, after being around $29 and change, this thing drops on an intraday basis to $6.04.

Closes that day on April 4, 2025, not that long ago, $7.17. Well, it’s doubled since then.

But it hasn’t doubled easily. It’s kind of struggled its way back up. It was having a nice move up. And then bam, the move today, 37.62%.

Now, just to give you a little bit of the basics, the fundamentals, Kohl’s was around an $850 million market cap company. Now we’re talking about $1.17 billion. Still not that big. Pretty good revenue, $16 billion in revenue over the trailing 12 months. Profit margin, absolutely horrible, 0.75%.

Yeah, 0.75%.

Awful balance sheet, $153 million in cash, $7.37 billion in debt, people. Sure enough, Kohl’s pays a dividend for those of you who like to get paid. The forward yield on it is 4.8%. That’s not so bad. Forward yield, 4.8%. Oh, but there’s a problem here, people. That is down partly because the stock is up and also down in terms of yield from 12%.

Yes, Kohl’s had a 12% dividend yield. On a trailing basis, the dividend yield was 12%. It’s now on a forward basis, 4.8%. So yes, it’s got a yield. Oh, but there’s a problem with that.

Even at almost 5%, they’re borrowing. They don’t have enough money in net income available to common shareholders to pay the dividend. So they have to borrow to pay that dividend. So it’s unlikely the dividend is going to be stable, if at all remains anywhere close to the level it’s at. So yes, is there some turnaround effect? Yeah, they’re working on stuff, but I don’t think the company is that well run. Really, what absolutely positively happened here was this stock caught fire in the meme sphere.

Became a meme stock overnight. And why not? Well, we know why. The Reddit crowd and some of the other sites that folks get on talk about plays and how to move stocks.

Well, Kohl’s fell right into that. And the reason it fell right into that, people, 66% of the floating shares, of Kohl’s shares floating, in other words, shares available to trade, 66% of them had been shorted. Now, the Reddit crowd, the stock meme chasers, they find this out. It’s pretty readily available information, but they start to percolate in their chat rooms and they start to buy call options.

And then they buy more. Now the call options are being sold to them by market makers, electronic market makers. There’s a whole dynamic going on there. And it doesn’t take a whole lot for some of those, the sellers of the calls to want to hedge if the stock starts to move up.

And how do they hedge? Well, buy stock. Guess what? As the stock started to go up, more and more people were buying calls and chasing calls itself.

Hence, the absolutely insane 37.62% gain on Tuesday. Now, that’s short covering people. That’s meme stock action full on. And that’s what made Kohl’s, past tense, a buy on Tuesday.

Now let’s compare it to Macy’s (M). Its closest competitor in the space is really Macy’s. Now Macy’s chart, making a little bit of a move upside also on Tuesday, a little bit of reaction to what happened to Kohl’s, but also had come down not quite as drastically and consolidating down here on its way up, hopefully. It’s above its 50-day moving up, heading towards its 200-day.

So Macy’s is a much better-run company. Macy’s is a $3.32 billion market cap company versus Kohl’s going from $850 million to $1.17 billion in a day. So $3.32 billion market cap for Macy’s, almost $23 billion in revenue over the trailing 12 months, and a profit margin, not bad, 2.45% for a big retailer like that. Cash and in terms of the balance sheet, $932 million in cash, $5.66 billion debt.

But much, much, much better operating margins, much better operating cash flow than Kohl’s. And yes, people, Macy’s does pay a dividend. It’s a real dividend. The forward yield 5.98%.

Now, Macy’s pays that yield out on a 35% payout ratio. That means of the net income available to common shareholders, Macy’s takes 35% of that and applies it to paying the dividend. Kohl’s, well, payout ratio is something like 125%. In other words, they don’t have enough money in the bucket that they use to pay a dividend.

Macy’s got plenty in that bucket. So yeah, Macy’s does have a shorter float. Hence, a bit of the pop today on Tuesday. The 6% move is because about 11% of Macy’s floating shares had been shorted.

So what we have here is back to meme status. And this is part, people, of the everything rally.

It’s getting a little crazy out there. When you see a company like Kohl’s, which does make sense because 65% short of float, is going to attract people. Enough people get attracted to that in these chat rooms, and they’re going to go out and speculate. Rightfully so, good on them. So hopefully they had – hopefully it’s a bunch of retail traders had a great day on Tuesday in calls. But it’s not a buy.

Certainly not up here, people. If you want a retailer in that off-price space, Macy’s. Better, I think, selection of stuff than Kohl’s. Kohl’s has got more white-label stuff. Macy’s all around better. Certainly, a better stock.

Guess what? If you’re going to choose one to actually hold like a real trade, like a real investment over some period of time, buy Macy’s, not Kohl’s. Catch you guys next week. Cheers.