Rising tensions between the United States and China, soaring crude prices and sluggish business spending are some of the issues that the domestic stock market is currently dealing with. Further, fears of an imminent recession add to the woes. Cumulatively, these factors are enough to dissuade investors from making any fresh investments in the stock market.
In spite of these lingering issues, there are retail stocks that deserve your attention, as they have managed to advance more than 10% in a month. We bring you four such retail stocks from the Zacks Retail-Wholesale sector.
Why the Retail Sector?
If one looks at it closely, the U.S. economy is not in bad shape and fears of recession seem to be overblown. In fact, a sturdy labor market, rising disposable income and an upbeat consumer environment indicate that is the case. It is true that the pace of economic growth has somewhat slowed down, but the recent cut in the benchmark interest rate will only ramp up investment activities and reinforce consumer spending.
The healthy consumer spending environment remains one of the pivotal factors driving the economy. And it goes without saying that the Retail & Wholesale sector’s prospects are closely tied to the purchasing power of consumers. The sector, which is ranked seven out of 16 in the list of Zacks sectors, may be seen as one of the favorite destinations for investments.
With consumers stepping up purchases and strategic endeavors undertaken at the company level, the sector seems to be on solid footing. So, picking up stocks from the space will be a prudent move. Here are four stocks you can count upon. We have shortlisted them on the basis of a Zacks Rank #1 (Strong Buy) or 2 (Buy), a VGM Score of A or B and stock price movement of more than 10% in a month. These stocks look well-poised based on their sound fundamentals and earnings growth prospects.
4 Prominent Picks
Zumiez Inc. (NASDAQ:ZUMZ), which operates as a specialty retailer of apparel, footwear, accessories, and hardgoods, is a solid bet with a long-term earnings growth rate of 12%. This Zacks Rank #1 company delivered average positive earnings surprise of 60.9% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for earnings for the current financial year has increased by 27 cents to $2.16 over the past 30 days, suggesting year-over-year growth of 20.7%. The stock, with a VGM Score of A, has advanced 24.8% in a month. You can see the complete list of today’s Zacks #1 Rank
You can also consider RH (NYSE:RH), a home furnishing retailer, with a Zacks Rank #1 and VGM Score of A. The company delivered an average positive earnings surprise of 20.2% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for earnings for the current financial year has improved by $1.38 to $10.78 over the past 30 days, suggesting year-over-year growth of 26.2%. We note that the stock has rallied 16% in a month.
Investors can count on Office Depot (NASDAQ:ODP), a provider of business services and supplies, products, and technology solutions. This Zacks Rank #2 company with a long-term earnings growth rate of 11.1% and a VGM Score of A has risen 26.5% in a month. The Zacks Consensus Estimate for earnings for the current financial year has been stable at 37 cents over the past 30 days, indicating year-over-year improvement of roughly 5.7%. The company delivered average positive earnings surprise of 19.4% in the trailing four quarters.
Burlington Stores, Inc. (NYSE:BURL), a retailer of branded apparel products, is another lucrative option. The stock has a VGM Score of A and long-term earnings growth rate of 15.9%. This Zacks Rank #2 company delivered average positive earnings surprise of 8.7% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for earnings for the current financial year has jumped 21 cents to $7.22 over the past 30 days, indicating year-over-year growth of 12.1%. We note that the stock has rallied 14.1% in a month.
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