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These 3 Discount Stores are Booming Despite the Retail Slump
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As we are all aware the Retail-Wholesale sector is no longer a bed of roses. In fact, the sector has been struggling with soft store and mall traffic trends and a tough retail landscape, due to the change in consumer shopping preferences and the rise of competition with pure-play eCommerce names like Amazon.com Inc. (AMZN - Free Report) .
Not only this, the players in the sector have also been hit hard by major economic challenges like the strong U.S. dollar, volatile commodity costs and global uncertainty. The volatility in U.S. dollar for quite some time now has been hurting retailers with worldwide operations.
This scenario has largely weighed on the performance of retailers, particularly Apparel and Department Stores. In a bid to stay in the rat race and be ahead of the curve, these retailers are heavily investing in building upon its eCommerce and omni-channel functionalities. At the same time, they remain focused on optimizing store fleet and are eventually cutting down upon brick-and-mortar store counts. Also, these companies have taken up an aggressive remodeling of stores to attract traffic.
Some retailers that are concentrating on optimizing store fleet include Macy’s Inc. (M - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) and J. C. Penney Company Inc. . Further, DICK’S Sporting Goods Inc. (DKS - Free Report) also announced plans to bring a slowdown in its store growth plan.
However, the game is still not over for this resilient sector, which is placed at the bottom 19% of the Zacks Sector Rank (13 out of 16). The sector still holds potential given the favorable economic indicators including decelerating unemployment rate and gradual housing market recovery. Apart from uplifting the economy, these factors play a key role in reviving consumer confidence that should improve consumer spending.
Notably, the Retail-Wholesale sector has outperformed the S&P 500 year to date. The sector registered growth of 17% while the S&P 500 index gained 9.2%.
While most industries under the Retail sector have been in the red, there is one industry that is booming – the Discount Stores. In such a volatile background, let’s see what makes the Discount Stores stand out.
Why Discount Stores are Performing Well?
Well, actually it is not surprising that the Discount Stores are doing well. Yes, the unique off-price model of these stores makes it a favorite shopping place for today’s value focused customers, particularly millennials. These stores offer attractive discounts, selling products at lower and reasonable prices when compared with traditional retail outlets. Further, these stores can easily adjust or slash price to react to a situation due to efficient distribution methods. This makes Discount Stores attractive destinations for customers in all economic scenarios.
These factors have kept the Discount Store format shielded from the current turmoil in the retail segment. Notably, the Retail-Discount Stores industry is at the top 38% of the Zacks Sector Rank (97 out of 256).
This calls for investing in the Retail-Discount Stores space. Here we have highlighted three Discount Stores stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of "A" or "B". These stocks are backed by sound fundamentals, surging share price and a track record of better-than-expected results.
First on the list is Burlington Stores Inc. (BURL - Free Report) , with a long-term earnings growth rate of 15.9% and a VGM Score of "A". The stock increased about 32.8% in the past one year, outperforming the Zacks categorized Retail-Discount Stores industry that declined 8.3%. This retailer of branded apparel delivered an average positive earnings surprise of 22.6% in the trailing four quarters and flaunts a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Another lucrative option is Target Corporation (TGT - Free Report) , which has a long-term earnings growth rate of 5.4% and a VGM Score of "A". This general merchandise retailer delivered an average positive earnings surprise of 16.5% in the trailing four quarters and carries a Zacks Rank #2. We note that in the last three months, the stock has declined 4.6%, narrower than the Zacks categorized Retail-Discount Stores industry’s fall of 6.1%.
Investors can count on Dollar General Corporation (DG - Free Report) , a discount retailer providing various consumable products in the southern, southwestern, midwestern, and eastern U.S. The stock has a long-term earnings growth rate of 10.6%. Further, the company posted an average positive earnings surprise of 1.4% in the trailing four quarters and has a VGM Score of "A". In the last three months, this Zacks Rank #2 stock has exhibited a bullish run and advanced roughly 2.4%, while the Zacks categorized Retail-Discount Stores industry lost 6.1%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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These 3 Discount Stores are Booming Despite the Retail Slump
As we are all aware the Retail-Wholesale sector is no longer a bed of roses. In fact, the sector has been struggling with soft store and mall traffic trends and a tough retail landscape, due to the change in consumer shopping preferences and the rise of competition with pure-play eCommerce names like Amazon.com Inc. (AMZN - Free Report) .
Not only this, the players in the sector have also been hit hard by major economic challenges like the strong U.S. dollar, volatile commodity costs and global uncertainty. The volatility in U.S. dollar for quite some time now has been hurting retailers with worldwide operations.
This scenario has largely weighed on the performance of retailers, particularly Apparel and Department Stores. In a bid to stay in the rat race and be ahead of the curve, these retailers are heavily investing in building upon its eCommerce and omni-channel functionalities. At the same time, they remain focused on optimizing store fleet and are eventually cutting down upon brick-and-mortar store counts. Also, these companies have taken up an aggressive remodeling of stores to attract traffic.
Some retailers that are concentrating on optimizing store fleet include Macy’s Inc. (M - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) and J. C. Penney Company Inc. . Further, DICK’S Sporting Goods Inc. (DKS - Free Report) also announced plans to bring a slowdown in its store growth plan.
However, the game is still not over for this resilient sector, which is placed at the bottom 19% of the Zacks Sector Rank (13 out of 16). The sector still holds potential given the favorable economic indicators including decelerating unemployment rate and gradual housing market recovery. Apart from uplifting the economy, these factors play a key role in reviving consumer confidence that should improve consumer spending.
Notably, the Retail-Wholesale sector has outperformed the S&P 500 year to date. The sector registered growth of 17% while the S&P 500 index gained 9.2%.
While most industries under the Retail sector have been in the red, there is one industry that is booming – the Discount Stores. In such a volatile background, let’s see what makes the Discount Stores stand out.
Why Discount Stores are Performing Well?
Well, actually it is not surprising that the Discount Stores are doing well. Yes, the unique off-price model of these stores makes it a favorite shopping place for today’s value focused customers, particularly millennials. These stores offer attractive discounts, selling products at lower and reasonable prices when compared with traditional retail outlets. Further, these stores can easily adjust or slash price to react to a situation due to efficient distribution methods. This makes Discount Stores attractive destinations for customers in all economic scenarios.
These factors have kept the Discount Store format shielded from the current turmoil in the retail segment. Notably, the Retail-Discount Stores industry is at the top 38% of the Zacks Sector Rank (97 out of 256).
This calls for investing in the Retail-Discount Stores space. Here we have highlighted three Discount Stores stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of "A" or "B". These stocks are backed by sound fundamentals, surging share price and a track record of better-than-expected results.
First on the list is Burlington Stores Inc. (BURL - Free Report) , with a long-term earnings growth rate of 15.9% and a VGM Score of "A". The stock increased about 32.8% in the past one year, outperforming the Zacks categorized Retail-Discount Stores industry that declined 8.3%. This retailer of branded apparel delivered an average positive earnings surprise of 22.6% in the trailing four quarters and flaunts a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Another lucrative option is Target Corporation (TGT - Free Report) , which has a long-term earnings growth rate of 5.4% and a VGM Score of "A". This general merchandise retailer delivered an average positive earnings surprise of 16.5% in the trailing four quarters and carries a Zacks Rank #2. We note that in the last three months, the stock has declined 4.6%, narrower than the Zacks categorized Retail-Discount Stores industry’s fall of 6.1%.
Investors can count on Dollar General Corporation (DG - Free Report) , a discount retailer providing various consumable products in the southern, southwestern, midwestern, and eastern U.S. The stock has a long-term earnings growth rate of 10.6%. Further, the company posted an average positive earnings surprise of 1.4% in the trailing four quarters and has a VGM Score of "A". In the last three months, this Zacks Rank #2 stock has exhibited a bullish run and advanced roughly 2.4%, while the Zacks categorized Retail-Discount Stores industry lost 6.1%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>