Stocks are pushing to fresh highs on Monday as the smooth, easy, summertime melt-up continues. While an ongoing rally in crude oil is responsible for much of the gain, investors are focusing their interest on retail stocks amid a flurry of earnings releases.
Optimism is on display despite a soft retail sales report last week. JC Penney Company Inc (NYSE:JCP), Macy’s Inc (NYSE:M) and other retailers that surged higher over the past few days were the norm, not the exception.
The market is looking past the sales report to price in a continuation of recent job market strength and renewed spending fueled, in part, by a drop in the savings rate. Indeed, consumer spending is the sole bright spot in the latest GDP growth report.
Fresh breakouts are underway in a number of retail stocks. Here are eight that investors should be giving a close look as potential buys sooner than later:
Retail Stocks on the Rise: Bed Bath & Beyond (BBBY)
Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares have traded down from a double top near $80 to return to 2010 levels for a loss of nearly 50% amid operational and traffic challenges. Shares are sniffing out a recovery now, however, as they close in on the 200-day moving average that hasn’t been crossed since last spring.
BBBY is focusing its turnaround efforts on lowering prices, increasing services such as free shipping, and more.
Bed Bath will next report results on Sept. 21 after the close. Analysts are looking for earnings of $1.17 per share on revenues of $3.1 billion.
Retail Stocks on the Rise: Abercrombie & Fitch (ANF)
Preppy retailer Abercrombie & Fitch Co. (NYSE:ANF) has been in the dumps since early 2015 as its unique brand of upscale casual wear didn’t resonate with cautious consumers.
That could be changing now, though, as the unemployment rate tumbles and whiffs of wage inflation start to appear. Analysts at Deutsche Bank upgraded the stock in June on the belief that ANF’s battered share price fully reflected operational challenges.
We’ll find out whether the analysts have it right on Aug. 30 before the bell, when Abercrombie reports its second-quarter earnings. Wall Street is expecting a loss of 20 cents per share on a 4.5% decline in revenues to $780.9 million.
Retail Stocks on the Rise: JCPenney (JCP)
JC Penney Company Inc (NYSE:JCP) shares have been in a funk since an aggressive turnaround attempt by the former retail head of Apple Inc. (NASDAQ:AAPL) failed horribly. New management has attempted to return to the company’s roots as a discount-oriented, family-friendly retailer.
And this time, the efforts are actually — finally — seeing some traction.
Last Friday, JCP reported a smaller-than-expected loss of 5 cents per share on a 1.5% year-over-year rise in revenues to $2.9 billion. New initiatives like adding appliance sales helped to boost margins. The company will next report results on Nov. 11 before the bell. Analysts are looking for a loss of 20 cents per share on revenues of nearly $3 billion.
Edge subscribers are enjoying a 5% gain in the stock since adding it on Monday morning.
Retail Stocks on the Rise: Macy’s (M)
Macy’s Inc (NYSE:M) has jumped up and over its 200-day moving average for the first time since last summer as the stock looks ready to recover from a nearly 60% peak-to-trough decline from last July to this May on a sales slowdown.
While Macy’s reported another sales decline last week (down 3.9% from last year), investors piled into M stock on signs management is adjusting by quickly trimming expenses, including the announcement of 100 store closures.
Macy’s will next report results on Nov. 9 before the bell. Analysts are looking for earnings of 41 cents per share on revenues of $5.6 billion. Edge subscribers are holding a long position in the stock.
Retail Stocks on the Rise: Tiffany & Co. (TIF)
Tiffany & Co. (NYSE:TIF) shares have punched up and over their 200-day moving average for the first time since last summer. Management is in the midst of a strategic turnaround effort focused on building its brand as a global luxury jewelry retailer, which has been hit by geopolitical turbulence such as the Brexit.
Tiffany is expected to report its second-quarter results on Aug. 25 before the bell. Analysts are looking for earnings of 73 cents per share on revenues of $937 million.
Retail Stocks on the Rise: Express (EXPR)
Express, Inc. (NYSE:EXPR) investors have been cautious amid a troublesome slowdown in comp-store sales and bloated inventories. But with expectations marked down, there is room for an upside surprise on a stronger-than-expected holiday shopping season.
EXPR shares are inching up and out of a four-month consolidation range near the bottom of its six-year-old post-IPO trading range.
Express’ next earnings report is expected to come before the Aug. 24 bell. Analysts are looking for earnings of 17 cents per share on revenues of $520.4 million.
Retail Stocks on the Rise: Nordstrom (JWN)
Nordstrom, Inc. (NYSE:JWN) shares have surged up and over their 200-day moving average for the first time since last summer on better-than-expected quarterly results last week. The company reported earnings of 67 cents per share on a slight revenue decline. Same-store sales declined 1.2% vs. the 3.0% drop analysts were expecting, bolstered by a strong Anniversary Sale.
Nordstrom’s third-quarter results are expected to come out Nov. 10 after the close. While that’s a ways away, analysts are looking for earnings of 52 cents per share on revenues of $3.5 billion.
Retail Stocks on the Rise: Kohl’s (KSS)
Kohl’s Corporation (NYSE:KSS) shares have blasted up and over their 200-day moving average after rebounding from lows last seen in 2012-13 for a drop of more than 55%.
Sentiment is turning on management’s ability to manage expenses and inventories in a challenging environment — something noted by Telsey Advisory Group analysts in a recent note to clients. Better-than-expected earnings of $1.22 per share reported last week, versus the $1.03 expected, helped as well.
Kohl’s will next report in November, after the bell on the 10th. Analysts expect KSS to report a profit of 72 cents per share on revenues of $4.4 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
