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On Apr 9, we upgraded our recommendation on leading specialty retailer Cabela’s Inc. (CAB - Analyst Report) to Outperform based on its strong outlook and improved future prospects. Cabela’s which sells hunting, fishing, camping, and related outdoor merchandise, holds a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

On Mar 12, Cabela’s stated that it expects first-quarter 2013 comparable-store sales to rise in the high-teens rate. Moreover, direct revenues are expected to increase in a low to mid-teens rate, which is a big positive as its direct business has long been grappling with declining revenue trends. Going forward, Cabela’s projects its earnings per share to surpass the analysts’ expectations.

Following the company’s strong outlook, earnings estimate revisions for Cabela’s have been displaying an uptrend. In the last 30 days, the Zacks Consensus Estimate jumped 31.1% to 59 cents per share for the first quarter, while it increased 5.5% to $3.26 for 2013.

Apart from the strong first quarter outlook, Cabela’s growth story looks compelling. The strong performance of the company’s next-generation stores continues to boost its top and bottom line results. We remain optimistic about its next generation store format as it requires less capital investment, enhances store productivity, and helps increase sales per square foot.

Moreover, the company’s Financial Services Business segment plays an integral role in supporting the merchandising business by encouraging customer loyalty rewards program that boost revenues, profitability and customer retention at its Retail and Direct businesses, leading to overall growth in sales and earnings.

Other Stocks to Consider

Beside Cabela’s, other stocks worth considering in the non-food retail, wholesale sector include Macy’s Inc. (M - Analyst Report), Sears Holdings Corporation (SHLD - Analyst Report) andBig 5 Sporting Goods Corp. (BGFV - Analyst Report), all of which hold a Zacks Rank #1 (Strong Buy) and are expected to continue with their upbeat performance.

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