Like the stock market itself, the world of retail is becoming a very selective place these days. While there are signs the economy is improving, it is by no means booming, and investors are becoming a bit more selective about how and where they spend their money these days.
The cautious spending policies are showing up in the fundamentals of the retail stocks including Sketchers USA (SKX), Michael Kors (KORS) and Coach (COH) among others, but not all of these picks are telling the same story.
My research and the data in my Portfolio Grader stock ranking tool can help you find the very best retail stocks to own (or avoid), and here’s my take on the top retail stocks right now:
Sketchers Stock – Buy
Sketchers USA (SKX) is one of those retail and apparel stocks that have captured consumers fancy. The company is seeing widespread demand for its line of footwear and accessories right now.
SKX stock recently reported 21% year over year sales growth as demand was higher than even the management of the company had expected. Sketchers earnings also showed the second consecutive surprise for Skechers, and third in the last four quarters.
SKX also remains one of the few retailers that didn’t complain about bad weather in the quarter as apparently customers braved the cold and snow to get a new pair of fashionable running shoes.
The company picked up an additional boost after Meb Keflezighi wore a pair of Sketchers performance running shoes while becoming the first American to win the Boston Marathon in 31 years.
Portfolio Grader upgraded Sketchers stock an A this week. Shares of SKX are a strong buy at the current price.
Kors Stock – Buy
Michael Kors Hodlings (KORS) has captured the fancy of high-end shoppers, and is adding locations both in the United States and around the world and is on a solid growth track. So far this year, earnings are up more than 100% and KORS stock turned in an impressive fourth quarter in spite of a generally weak holiday retail season.
Michael Kors has now posted four consecutive positive earnings surprises and this excellent performance is recognized by Portfolio Grader. KORS stock was upgraded to an A back in January and remains a strong buy at the current price.
Coach Stock – Sell
Coach Incorporated (COH), unfortunately, hasn’t shared in the success of Sketchers or Kors. In fact, a lot of Michael Kors’ success has come at the expense of COH stock.
The high end hand bag and accessories company reported a rough quarter as sales and earnings fall fell sharply in the first three months of the year. Same store sales in the United Sates were much worse than analyst had expected as they declined by 21% year over year.
Also, Coach earnings showed profits fell from 84 cents a share last year to just 68 cents a share this year. Revenues were less than analysts expected and management warned investors that sales would probably continue to decline.
The company continued struggles have been reflected in its Portfolio Grader sell ranking all year. After the recent report the stock was downgraded even further to an F ranking and is currently a strong sell.
Louis Navellier is the editor of Blue Chip Growth.