Why Hidden Gem BURL Stock Is a Must-Have for Risk-Tolerant Investors


  • Burlington Stores (BURL) could benefit from a persistent slowdown in the economy.
  • Burlington anticipates strong earnings for the current quarter.
  • Investors should weigh the risks and potential rewards, and consider a small position BURL stock.
BURL stock - Why Hidden Gem BURL Stock Is a Must-Have for Risk-Tolerant Investors

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Is it possible for a retail apparel outlet to thrive when the economy is shaky? Yes, it is definitely possible as Burlington Stores (NYSE:BURL) caters to discount hunters, an advantage during elevated inflation. Sure, it’s somewhat risky to invest in retail apparel stocks, but Burlington’s favorable current-quarter outlook indicates BURL stock could run higher.

Headquartered in New Jersey, Burlington Stores unabashedly describes itself as a “nationally recognized off-price retailer.” To put it simply, the company buys excess clothing/apparel inventory and then sells it to shoppers at a discount.

This business model can benefit Burlington during times of economic uncertainty. As Burlington Stores CEO Michael O’Sullivan explained, an “economic slowdown” in 2023 “should create a greater consumer focus on value.” Burlington’s management expects to report strong earnings during the current quarter. So, there may be a prime setup here for risk-tolerant investors.

BURL Burlington Stores $187.93

What’s Happening With BURL Stock?

While BURL stock recently traded near $200, it has plenty of headroom as the stock previously traded near $350. The Burlington Stores share price might revisit $350 eventually, but this would require a great deal of patience.

Telsey Advisory Group analyst Dana Telsey set a $250 price target on Burlington shares, along with an “outperform” rating. Telsey observed Burlington Stores’ sales guidance came in above expectations.

Specifically, the company guided for current-quarter (first quarter of fiscal 2023) total sales to increase 12% to 14%. Similarly, Burlington guided for full-year fiscal 2023 total sales to grow 12% to 14%.

Clearly, Burlington Stores’ management is confident about the company’s future sales prospects. Turning to the bottom line, Burlington guided for current-quarter adjusted EPS of 85 cents to 95 cents. This is higher than Wall Street’s consensus estimate of 81 cents per share. Furthermore, it would represent major improvement over the 54 cents reported in the year-earlier quarter.

Burlington Stores Could Benefit from Elevated Inflation

Many stores are undoubtedly struggling during this time of high inflation. Yet, this problem could actually be an opportunity for Burlington Stores to stand out and thrive.

This might sound counterintuitive, at first. Yet, Loop Capital analyst Laura Champine envisions Burlington Stores attracting customers while inflation persists. Champine lifted her target price on BURL stock from $220 to $225 and upgraded Burlington shares from “hold” to “buy.”

Moreover, Champine acknowledges that “persistent inflation is tough for Burlington’s customers,” but sees the glass as half-full because “the improved values and brands in stores are likely to drive market share gains for the company.” The analyst also observes that Burlington’s “new signage is calling out opening price points across categories.”

What You Can Do Now

Again, it should be emphasized that retail apparel stocks can be risky because economic conditions can change at any given moment. Still, Burlington Stores could be a winner in the sector if persistent inflation causes shoppers to seek out bargains.

BURL stock might revisit the $350 area eventually, but Champine’s $225 price objective looks more realistic for this year. So, if you agree with the company’s optimistic current-quarter sales and EPS forecasts, feel free to consider a small share position in Burlington Stores.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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Article printed from InvestorPlace Media, https://investorplace.com/market360/2023/04/why-hidden-gem-burl-stock-is-a-must-have-for-risk-tolerant-investors/.

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