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5 Retail Stocks Well Tailored for Your 2017 Portfolio
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“All’s Well That Ends Well”. The U.S. economy now looks quite firmly placed on the growth trajectory, after a roller coaster ride since the start of 2016 – thanks to a slew of events. The Wall Street juggled with various macro and micro issues such as slowdown in China, sluggishness in the energy sector, the Brexit storm, the much awaited Presidential election, and the uncertainty surrounding the rate hike.
All these events played a crucial role in deciding the course of the economy and kept investors on tenterhooks. Nonetheless, the dust has settled and things are looking much more favorable on the domestic front. Brexit did not derail the recovery in the economy, which marked the victory of Donald Trump over Hillary Clinton. Further, steady gain in oil prices, improving labor market and inflation edging toward the desired 2% target, provided enough room for a rate hike this month.
The U.S. economy is largely healed and has enough steam to sustain the momentum in 2017. However, we understand that it is not fully immune to global uncertainties, which could limit growth. Further, it remains to be seen how Trump’s revolutionary ideas are going to shape the economy. But for now, things are looking great and it is time to rejuvenate your portfolio as we head into the New Year.
Retail Sector Leads the March
At one end, the “Trump Factor” is ruling the U.S. stock market, while on the other end, the recent hike in the benchmark interest rate by a quarter of a percentage point to 0.5–0.75% is making all the headlines, signaling that the U.S. economy has stabilized. The U.S. economy grew 3.5% in the third quarter, faring better than the second and first estimates of 3.2% and 2.9% growth and the second-quarter anemic increase of 1.4%.
Per the Labor Department, the economy added 178,000 jobs in November, up from 142,000 in October. Moreover, unemployment rate dropped to 4.6% last month from 4.9% in October, marking the lowest level reached in nine years. All these sound good for retailers.
Another factor that makes us positive is improving consumer sentiment. Per the final reading of the University of Michigan, Consumer Sentiment increased to 98.2 in December from 93.8 in November. We expect this positive sentiment to propel consumer spending, which accounts for over two-thirds of the U.S. economic activity.
Consumer spending increased 3% during the third quarter. The Commerce Department recently unveiled that consumer spending advanced 0.2% in November following an upwardly revised 0.4% jump in October. Although it increased moderately in November, experts believe it to be a temporary affair, given other encouraging economic indicators.
The optimism over the health of the economy received a further boost from the U.S. factory activity data. The Institute for Supply Management (ISM) stated that the index of national factory rose to 53.2 in November from 51.9 in October. Non-manufacturing activity index jumped to 57.2 in November from October’s reading of 54.8 and reached the highest level since 58.3 recorded in Oct 2015.
Given the rebounding economy, still lower gasoline prices and improving labor market with gradual increase in wages, the retail space is brimming with optimism at the moment.
5 Prominent Picks
We have highlighted five Retail/Wholesale stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of “A” or “B”. Not only this, these stocks have outperformed their respective industries.
Investors can count on Best Buy Co., Inc. (BBY - Free Report) , a retailer of technology products, services, and solutions. The company posted an average positive earnings surprise of 25.7% in the trailing four quarters and has a long-term earnings growth rate of 11.9%. In the past six months, the stock has surged roughly 49.1% and outperformed the Zacks categorized Retail-Consumer Electronic industry, which gained 38.7%. The stock has a VGM Score of “A” and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. (BURL - Free Report) , a retailer of branded apparel products, is a solid bet, with a Zacks Rank #1 and a VGM Score of “B”. The company posted an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%. The stock has surged 36.9% in the past six months and comfortably outperformed the Zacks categorized Retail-Discount & Variety industry, which increased only 1.8%.
We suggest investing in Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , which has a long-term earnings growth rate of 17.4% and a VGM Score of “B”. This owner and operator of entertainment and dining venues delivered an average positive earnings surprise of 37.8% in the trailing four quarters and carries a Zacks Rank #1. We note that in the past six months, the stock has advanced approximately 23.6%, while the Zacks categorized Retail-Food & Restaurants industry has shown an increase of 3.8%.
You may also consider Tilly's, Inc. (TLYS - Free Report) , a retailer of casual apparel, footwear, and accessories. The stock sports a Zacks Rank #1 and has a VGM Score of “B”. The company posted an average positive earnings surprise of 98% in the trailing four quarters and has a long-term earnings growth rate of 13%. In the past six months, the stock has displayed a fabulous bull run on the index and has risen over 100%, while the Zacks categorized Retail-Apparel/Shoe industry increased just 8.9%.
Last but not the least is Papa John's International, Inc. (PZZA - Free Report) , which operates and franchises pizza delivery and carryout restaurants under the Papa Johns trademark. The stock carries a Zacks Rank #2 and has a VGM Score of “B”. The company posted an average positive earnings surprise of 11.3% in the trailing four quarters and has a long-term earnings growth rate of 15.5%. In the past six months, the stock has exhibited a bullish run and surged 31.8%, while the Zacks categorized Retail-Food & Restaurants industry increased 3.8%.
You can ring in the New Year with these five aforementioned retail stocks, which are well tailored for your portfolio.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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5 Retail Stocks Well Tailored for Your 2017 Portfolio
“All’s Well That Ends Well”. The U.S. economy now looks quite firmly placed on the growth trajectory, after a roller coaster ride since the start of 2016 – thanks to a slew of events. The Wall Street juggled with various macro and micro issues such as slowdown in China, sluggishness in the energy sector, the Brexit storm, the much awaited Presidential election, and the uncertainty surrounding the rate hike.
All these events played a crucial role in deciding the course of the economy and kept investors on tenterhooks. Nonetheless, the dust has settled and things are looking much more favorable on the domestic front. Brexit did not derail the recovery in the economy, which marked the victory of Donald Trump over Hillary Clinton. Further, steady gain in oil prices, improving labor market and inflation edging toward the desired 2% target, provided enough room for a rate hike this month.
The U.S. economy is largely healed and has enough steam to sustain the momentum in 2017. However, we understand that it is not fully immune to global uncertainties, which could limit growth. Further, it remains to be seen how Trump’s revolutionary ideas are going to shape the economy. But for now, things are looking great and it is time to rejuvenate your portfolio as we head into the New Year.
Retail Sector Leads the March
At one end, the “Trump Factor” is ruling the U.S. stock market, while on the other end, the recent hike in the benchmark interest rate by a quarter of a percentage point to 0.5–0.75% is making all the headlines, signaling that the U.S. economy has stabilized. The U.S. economy grew 3.5% in the third quarter, faring better than the second and first estimates of 3.2% and 2.9% growth and the second-quarter anemic increase of 1.4%.
Per the Labor Department, the economy added 178,000 jobs in November, up from 142,000 in October. Moreover, unemployment rate dropped to 4.6% last month from 4.9% in October, marking the lowest level reached in nine years. All these sound good for retailers.
Another factor that makes us positive is improving consumer sentiment. Per the final reading of the University of Michigan, Consumer Sentiment increased to 98.2 in December from 93.8 in November. We expect this positive sentiment to propel consumer spending, which accounts for over two-thirds of the U.S. economic activity.
Consumer spending increased 3% during the third quarter. The Commerce Department recently unveiled that consumer spending advanced 0.2% in November following an upwardly revised 0.4% jump in October. Although it increased moderately in November, experts believe it to be a temporary affair, given other encouraging economic indicators.
The optimism over the health of the economy received a further boost from the U.S. factory activity data. The Institute for Supply Management (ISM) stated that the index of national factory rose to 53.2 in November from 51.9 in October. Non-manufacturing activity index jumped to 57.2 in November from October’s reading of 54.8 and reached the highest level since 58.3 recorded in Oct 2015.
Given the rebounding economy, still lower gasoline prices and improving labor market with gradual increase in wages, the retail space is brimming with optimism at the moment.
5 Prominent Picks
We have highlighted five Retail/Wholesale stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of “A” or “B”. Not only this, these stocks have outperformed their respective industries.
Investors can count on Best Buy Co., Inc. (BBY - Free Report) , a retailer of technology products, services, and solutions. The company posted an average positive earnings surprise of 25.7% in the trailing four quarters and has a long-term earnings growth rate of 11.9%. In the past six months, the stock has surged roughly 49.1% and outperformed the Zacks categorized Retail-Consumer Electronic industry, which gained 38.7%. The stock has a VGM Score of “A” and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. (BURL - Free Report) , a retailer of branded apparel products, is a solid bet, with a Zacks Rank #1 and a VGM Score of “B”. The company posted an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%. The stock has surged 36.9% in the past six months and comfortably outperformed the Zacks categorized Retail-Discount & Variety industry, which increased only 1.8%.
We suggest investing in Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , which has a long-term earnings growth rate of 17.4% and a VGM Score of “B”. This owner and operator of entertainment and dining venues delivered an average positive earnings surprise of 37.8% in the trailing four quarters and carries a Zacks Rank #1. We note that in the past six months, the stock has advanced approximately 23.6%, while the Zacks categorized Retail-Food & Restaurants industry has shown an increase of 3.8%.
You may also consider Tilly's, Inc. (TLYS - Free Report) , a retailer of casual apparel, footwear, and accessories. The stock sports a Zacks Rank #1 and has a VGM Score of “B”. The company posted an average positive earnings surprise of 98% in the trailing four quarters and has a long-term earnings growth rate of 13%. In the past six months, the stock has displayed a fabulous bull run on the index and has risen over 100%, while the Zacks categorized Retail-Apparel/Shoe industry increased just 8.9%.
Last but not the least is Papa John's International, Inc. (PZZA - Free Report) , which operates and franchises pizza delivery and carryout restaurants under the Papa Johns trademark. The stock carries a Zacks Rank #2 and has a VGM Score of “B”. The company posted an average positive earnings surprise of 11.3% in the trailing four quarters and has a long-term earnings growth rate of 15.5%. In the past six months, the stock has exhibited a bullish run and surged 31.8%, while the Zacks categorized Retail-Food & Restaurants industry increased 3.8%.
You can ring in the New Year with these five aforementioned retail stocks, which are well tailored for your portfolio.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>