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After a promising pre-market, red swept across the board again today to kick off another week in the market. The Ukrainian conflict, lingering COVID-19 effects, and the Federal Open Market Committee’s (FOMC) plans have all been leading factors affecting performance that we’ve become all too familiar with.
Even though it’s too early to tell, there are a few reasons why the market outlook for this week seems to be a little clearer. Oil prices have continued their descent, diplomatic talks between Russia and Ukraine have continued, and the FOMC’s decision to raise rates is no longer an uncertainty.
When market sentiment turns the corner and fear retreats, ample investment opportunities with less risk arise in these calmer waters. Here are three #1 (Strong Buy) retail stocks with high VGM scores that would be great additions to your portfolio amid a rebounding market.
Kroger
Kroger Co. (KR - Free Report) is a top drug and food retailer that currently resides in the Zacks Retail – Supermarkets Industry. Based in Ohio, the company owns and operates retail names such as Kroger, Food 4 Less, Harris Teeter, Pick ‘n Save, Fred Meyers, and others. KR has four types of formats for its stores, including combo stores, multi-department stores, marketplace stores, and price impact warehouses. As of January, Kroger Co. has nearly 2,750 stores spanning across the U.S.
Kroger shares, up 56% over the last year, have considerably outpaced the S&P 500’s return of 7.5%. Price action has been the same for the more recent term as well; year-to-date, shares have shown a much higher blend of defense and value than the S&P 500, increasing 23% while the S&P 500 has declined nearly 12%. The chart below compares the performance of these 2 names over the last year.
Image Source: Zacks Investment Research
Current quarter, current year, and next year estimates have all seen positive revisions over the last 60 days. Six analysts have upwardly revised their estimates for the current year, increasing the consensus estimate trend by nearly 7% to $3.66 per share. There’s been one estimate revision for Q1, increasing the trend by 6% to a quarterly consensus EPS estimate to $1.21. FY24 has seen two upwards revisions by analysts, increasing the yearly EPS consensus estimate by roughly 7% to $3.85.
Image Source: Zacks Investment Research
Kroger, currently on a blazing-hot earnings streak, has strung together nine consecutive quarterly earnings beats dating back to March 2020. In its latest quarterly earnings, the company beat the $0.73 per share estimate by $0.18, representing a pleasant 25% positive surprise. Over the last four quarterly reports, Kroger has enjoyed an average earnings surprise of 22%. As shown below, three of the last four earnings surprises for the retail giant have been over 20%.
Image Source: Zacks Investment Research
Kroger has displayed strong consistent earnings growth in the recent term and has proven its ability to generate shareholder value over time by increasing quarterly dividends for the 15th consecutive year. Estimates for KR have seen a notable number of upwards revisions over the last 60 days, its digital e-commerce platform is growing rapidly, and sales have been increasing. Due to these factors, its Zacks Rank #1 (Strong Buy), and its high VGM score, I believe this retail giant would be a great addition to your portfolio.
Target
Target (TGT - Free Report) is the next retail stock that has seen recent favorable revision action paired with a great growth outlook. The Minneapolis-based big-box retailer provides a one-stop-shop for consumers with an extensive product catalog ranging from household essentials and electronics to children’s toys and apparel. Target has over 1,900 stores with operations in every state within the U.S.
Over the last year, TGT shares have increased by 17%. Using the S&P 500 as a benchmark, the big-box retail giant has considerably outpaced the general market by roughly 10%. Year-to-date, shares of the company have also provided a slightly higher level of defense, scratching in a decline of roughly -9.5%. Below is a chart comparing the performance over the last year.
Image Source: Zacks Investment Research
Notably, analysts have been rapidly revising estimates for the current and next year over the last 60 days. For the current year, the consensus estimate trend has increased by nearly 10%, raising full-year EPS estimates to $14.47 per share. The trend has increased by a similar margin (9.6%) for next year, raising the forecasted yearly EPS to $15.76.
Image Source: Zacks Investment Research
Somehow more impressive than Kroger, Target has chained together 12 consecutive earnings beats dating back to May 2019. Including its most recent quarter, more than half of the last 12 reports have witnessed an earnings surprise in the double digits. The surprise for the most recent quarter, 11.5%, was enough to beat estimates by $0.33 per share and report quarterly EPS of $3.19. The average earnings surprise for the retailer has been nearly 22% over the last four quarters. EPS data of the last seven quarters is below.
Image Source: Zacks Investment Research
Target has vastly succeeded in growing its EPS and has had upward positive revisions for the current and next year. Evolving out of its typical brick-and-mortar business, Target is positioned well for future growth with its robust e-commerce platform, and the company has performed better than the general market over the last year as well. For these reasons, I believe Target to be a strong addition to your portfolio.
Its overall VGM Score is an A and is a Zacks Rank #1 (Strong Buy).
Nordstrom
Nordstrom (JWN - Free Report) is the final retail stock with a Zacks Rank #1 (Strong Buy) that I’ll be analyzing. Originally a footwear company, JWN has transformed into a leading fashion retailer offering compelling clothing, shoes, and accessories for men, women, and kids. Headquartered in Seattle, the company currently operates 100 full-line stores in 40 states of the U.S. and Canada.
Price action for JWN has been interesting, to say the least. JWN detached from the broader market for the majority of the past year, falling 48%, but recently, the stock skyrocketed following its quarterly earnings. Year-to-date, JWN has posted a return of nearly 7%. Below is a chart comparing the performance over the last year.
Image Source: Zacks Investment Research
Current and next year estimates for the retailer have recently jumped through the roof. Over the last 60 days, there have been 13 total upwards estimate revisions. For the current year, EPS estimates have climbed 62% to $3.30 per share, and for next year, the consensus estimate trend has increased nearly 43% to $3.30 per share.
Image Source: Zacks Investment Research
Earnings for the company have been mixed over the last four quarters, with two estimate beats and two misses. Within the latest quarterly report, JWN surprised by nearly 20% and beat estimates by $0.19, reporting a quarterly EPS of $1.23. Additionally, over the last four reports, the average surprise has been about 14%.
Image Source: Zacks Investment Research
JWN’s rocky performance over the last year is not enough to deter me, and JWN’s current forward 12-month earnings multiple of 6.9X is why. The retailer’s enticingly cheaper P/E is considerably lower than the industry’s 12.1X, representing an opportunity to buy shares at a discount. Because of its valuation, recent upward estimate revisions, and a promising recent quarter, I believe that JWN would be a great addition to your portfolio.
JWN has a VGM score of an A and is a Zacks Rank #1 (Strong Buy).
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3 Strong Buy Retail Stocks to Buy Now
After a promising pre-market, red swept across the board again today to kick off another week in the market. The Ukrainian conflict, lingering COVID-19 effects, and the Federal Open Market Committee’s (FOMC) plans have all been leading factors affecting performance that we’ve become all too familiar with.
Even though it’s too early to tell, there are a few reasons why the market outlook for this week seems to be a little clearer. Oil prices have continued their descent, diplomatic talks between Russia and Ukraine have continued, and the FOMC’s decision to raise rates is no longer an uncertainty.
When market sentiment turns the corner and fear retreats, ample investment opportunities with less risk arise in these calmer waters. Here are three #1 (Strong Buy) retail stocks with high VGM scores that would be great additions to your portfolio amid a rebounding market.
Kroger
Kroger Co. (KR - Free Report) is a top drug and food retailer that currently resides in the Zacks Retail – Supermarkets Industry. Based in Ohio, the company owns and operates retail names such as Kroger, Food 4 Less, Harris Teeter, Pick ‘n Save, Fred Meyers, and others. KR has four types of formats for its stores, including combo stores, multi-department stores, marketplace stores, and price impact warehouses. As of January, Kroger Co. has nearly 2,750 stores spanning across the U.S.
Kroger shares, up 56% over the last year, have considerably outpaced the S&P 500’s return of 7.5%. Price action has been the same for the more recent term as well; year-to-date, shares have shown a much higher blend of defense and value than the S&P 500, increasing 23% while the S&P 500 has declined nearly 12%. The chart below compares the performance of these 2 names over the last year.
Image Source: Zacks Investment Research
Current quarter, current year, and next year estimates have all seen positive revisions over the last 60 days. Six analysts have upwardly revised their estimates for the current year, increasing the consensus estimate trend by nearly 7% to $3.66 per share. There’s been one estimate revision for Q1, increasing the trend by 6% to a quarterly consensus EPS estimate to $1.21. FY24 has seen two upwards revisions by analysts, increasing the yearly EPS consensus estimate by roughly 7% to $3.85.
Image Source: Zacks Investment Research
Kroger, currently on a blazing-hot earnings streak, has strung together nine consecutive quarterly earnings beats dating back to March 2020. In its latest quarterly earnings, the company beat the $0.73 per share estimate by $0.18, representing a pleasant 25% positive surprise. Over the last four quarterly reports, Kroger has enjoyed an average earnings surprise of 22%. As shown below, three of the last four earnings surprises for the retail giant have been over 20%.
Image Source: Zacks Investment Research
Kroger has displayed strong consistent earnings growth in the recent term and has proven its ability to generate shareholder value over time by increasing quarterly dividends for the 15th consecutive year. Estimates for KR have seen a notable number of upwards revisions over the last 60 days, its digital e-commerce platform is growing rapidly, and sales have been increasing. Due to these factors, its Zacks Rank #1 (Strong Buy), and its high VGM score, I believe this retail giant would be a great addition to your portfolio.
Target
Target (TGT - Free Report) is the next retail stock that has seen recent favorable revision action paired with a great growth outlook. The Minneapolis-based big-box retailer provides a one-stop-shop for consumers with an extensive product catalog ranging from household essentials and electronics to children’s toys and apparel. Target has over 1,900 stores with operations in every state within the U.S.
Over the last year, TGT shares have increased by 17%. Using the S&P 500 as a benchmark, the big-box retail giant has considerably outpaced the general market by roughly 10%. Year-to-date, shares of the company have also provided a slightly higher level of defense, scratching in a decline of roughly -9.5%. Below is a chart comparing the performance over the last year.
Image Source: Zacks Investment Research
Notably, analysts have been rapidly revising estimates for the current and next year over the last 60 days. For the current year, the consensus estimate trend has increased by nearly 10%, raising full-year EPS estimates to $14.47 per share. The trend has increased by a similar margin (9.6%) for next year, raising the forecasted yearly EPS to $15.76.
Image Source: Zacks Investment Research
Somehow more impressive than Kroger, Target has chained together 12 consecutive earnings beats dating back to May 2019. Including its most recent quarter, more than half of the last 12 reports have witnessed an earnings surprise in the double digits. The surprise for the most recent quarter, 11.5%, was enough to beat estimates by $0.33 per share and report quarterly EPS of $3.19. The average earnings surprise for the retailer has been nearly 22% over the last four quarters. EPS data of the last seven quarters is below.
Image Source: Zacks Investment Research
Target has vastly succeeded in growing its EPS and has had upward positive revisions for the current and next year. Evolving out of its typical brick-and-mortar business, Target is positioned well for future growth with its robust e-commerce platform, and the company has performed better than the general market over the last year as well. For these reasons, I believe Target to be a strong addition to your portfolio.
Its overall VGM Score is an A and is a Zacks Rank #1 (Strong Buy).
Nordstrom
Nordstrom (JWN - Free Report) is the final retail stock with a Zacks Rank #1 (Strong Buy) that I’ll be analyzing. Originally a footwear company, JWN has transformed into a leading fashion retailer offering compelling clothing, shoes, and accessories for men, women, and kids. Headquartered in Seattle, the company currently operates 100 full-line stores in 40 states of the U.S. and Canada.
Price action for JWN has been interesting, to say the least. JWN detached from the broader market for the majority of the past year, falling 48%, but recently, the stock skyrocketed following its quarterly earnings. Year-to-date, JWN has posted a return of nearly 7%. Below is a chart comparing the performance over the last year.
Image Source: Zacks Investment Research
Current and next year estimates for the retailer have recently jumped through the roof. Over the last 60 days, there have been 13 total upwards estimate revisions. For the current year, EPS estimates have climbed 62% to $3.30 per share, and for next year, the consensus estimate trend has increased nearly 43% to $3.30 per share.
Image Source: Zacks Investment Research
Earnings for the company have been mixed over the last four quarters, with two estimate beats and two misses. Within the latest quarterly report, JWN surprised by nearly 20% and beat estimates by $0.19, reporting a quarterly EPS of $1.23. Additionally, over the last four reports, the average surprise has been about 14%.
Image Source: Zacks Investment Research
JWN’s rocky performance over the last year is not enough to deter me, and JWN’s current forward 12-month earnings multiple of 6.9X is why. The retailer’s enticingly cheaper P/E is considerably lower than the industry’s 12.1X, representing an opportunity to buy shares at a discount. Because of its valuation, recent upward estimate revisions, and a promising recent quarter, I believe that JWN would be a great addition to your portfolio.
JWN has a VGM score of an A and is a Zacks Rank #1 (Strong Buy).