We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Retail Sales Beat Estimates: Time to Buy These 2 Top-Ranked Stocks?
Read MoreHide Full Article
We received some insightful and promising economic data this morning in the form of US Retail Sales.
Retail activity in the United States surged by 0.6% in December 2023 compared to the previous month, surpassing expectations of 0.4% and marking the most substantial growth in three months. The upswing was primarily driven by a 1.2% increase in auto sales. When excluding auto sales, retail activity still experienced a noteworthy 0.4% uptick.
The US consumer has remained extremely resilient over the past two years, aiding considerably in the robust economic data holding this market up.
There are two retail stocks that I think are particularly compelling investments at the moment and offer complimentary opportunities. The upbeat retail sales data along with high Zacks Ranks should provide bullish catalysts for both stocks.
The TJX Companies
The TJX Companies (TJX - Free Report) is just an absolute beast of stock, and in my opinion one of the best retail investments in the market.
The TJX Companies is a leading off-price retailer with a diverse portfolio of popular brands, including T.J. Maxx, Marshalls, HomeGoods, and Sierra. Known for its treasure-hunt shopping experience, TJX offers a wide range of discounted merchandise spanning apparel, home goods, accessories, and more. The company's success is built on its ability to deliver value to customers through strategic sourcing and a constantly changing assortment of quality products at affordable prices.
Over the last 15 years, TJX stock has compounded at an incredible 23% annually, markedly outperforming both the broad market and industry. The stock continues to charge higher and made new all-time highs yesterday, indicating strong momentum.
The company also manages to pay a tidy dividend yield of 1.4% and has raised the payout by an average of 10.2% annually over the last five years. Following the theme of returning cash to shareholders, The TJX Company has also been a steady buyer of its own stock, reducing the share count by 20% over the last 10 years.
Image Source: Zacks Investment Research
The TJX Company currently boasts a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions. In the chart below, we can see that in the last two months, the earnings trend has been edging higher.
Although FY24 earnings estimates are unchanged, they are forecast to grow and impressive 20.6% YoY to $3.75 per share. However, FY24 earnings estimates have increased by 1.2% and are projected to climb 9.5% YoY to $4.11.
TJX’s ability to steadily grow earnings year after year is a perfect example of the kind of stock investors can buy and hold over long periods of time.
Image Source: Zacks Investment Research
Target
Target (TGT - Free Report) has had a more challenged stock performance over the last couple of years, currently down (-50%) from its all-time high. As a retailer of more premium products that TJX, TGT’s performance is more sensitive to macroeconomic trends. While consumer discretionary spending tapered just marginally over the last 18 months, overinvestment in inventory slammed Target stock lower.
However, over the last 15 years it has still compounded at a commendable 13% annually. Furthermore, its currently depressed stock price, along with upward trending earnings revisions, and fair valuation make it much more appealing now.
Analysts’ earnings revisions have begun to perk up giving Target a Zacks Rank #2 (Buy) rating. Earnings estimate for FY24 have risen by 0.6% in the last two months and are forecast to grow 38.5% YoY. Additionally, FY25 estimates have moved higher by 0.55% and are expected to climb 9.3% YoY.
Image Source: Zacks Investment Research
Target is currently trading at a one year forward earnings multiple of 16.9x, which is just above its 10-year median of 16.2x, but at a huge discount to the industry average of 29.9x.
Target also pays a generous dividend yield of 3.1%, really sweetening the deal for shareholders.
Image Source: Zacks Investment Research
Bottom Line
For investors interested in taking a bet on the resilience of the US consumer these two stocks offer two different approaches. The TJX Companies is a steady compounder, while Target looks like a value play.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Retail Sales Beat Estimates: Time to Buy These 2 Top-Ranked Stocks?
We received some insightful and promising economic data this morning in the form of US Retail Sales.
Retail activity in the United States surged by 0.6% in December 2023 compared to the previous month, surpassing expectations of 0.4% and marking the most substantial growth in three months. The upswing was primarily driven by a 1.2% increase in auto sales. When excluding auto sales, retail activity still experienced a noteworthy 0.4% uptick.
The US consumer has remained extremely resilient over the past two years, aiding considerably in the robust economic data holding this market up.
There are two retail stocks that I think are particularly compelling investments at the moment and offer complimentary opportunities. The upbeat retail sales data along with high Zacks Ranks should provide bullish catalysts for both stocks.
The TJX Companies
The TJX Companies (TJX - Free Report) is just an absolute beast of stock, and in my opinion one of the best retail investments in the market.
The TJX Companies is a leading off-price retailer with a diverse portfolio of popular brands, including T.J. Maxx, Marshalls, HomeGoods, and Sierra. Known for its treasure-hunt shopping experience, TJX offers a wide range of discounted merchandise spanning apparel, home goods, accessories, and more. The company's success is built on its ability to deliver value to customers through strategic sourcing and a constantly changing assortment of quality products at affordable prices.
Over the last 15 years, TJX stock has compounded at an incredible 23% annually, markedly outperforming both the broad market and industry. The stock continues to charge higher and made new all-time highs yesterday, indicating strong momentum.
The company also manages to pay a tidy dividend yield of 1.4% and has raised the payout by an average of 10.2% annually over the last five years. Following the theme of returning cash to shareholders, The TJX Company has also been a steady buyer of its own stock, reducing the share count by 20% over the last 10 years.
Image Source: Zacks Investment Research
The TJX Company currently boasts a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions. In the chart below, we can see that in the last two months, the earnings trend has been edging higher.
Although FY24 earnings estimates are unchanged, they are forecast to grow and impressive 20.6% YoY to $3.75 per share. However, FY24 earnings estimates have increased by 1.2% and are projected to climb 9.5% YoY to $4.11.
TJX’s ability to steadily grow earnings year after year is a perfect example of the kind of stock investors can buy and hold over long periods of time.
Image Source: Zacks Investment Research
Target
Target (TGT - Free Report) has had a more challenged stock performance over the last couple of years, currently down (-50%) from its all-time high. As a retailer of more premium products that TJX, TGT’s performance is more sensitive to macroeconomic trends. While consumer discretionary spending tapered just marginally over the last 18 months, overinvestment in inventory slammed Target stock lower.
However, over the last 15 years it has still compounded at a commendable 13% annually. Furthermore, its currently depressed stock price, along with upward trending earnings revisions, and fair valuation make it much more appealing now.
Analysts’ earnings revisions have begun to perk up giving Target a Zacks Rank #2 (Buy) rating. Earnings estimate for FY24 have risen by 0.6% in the last two months and are forecast to grow 38.5% YoY. Additionally, FY25 estimates have moved higher by 0.55% and are expected to climb 9.3% YoY.
Image Source: Zacks Investment Research
Target is currently trading at a one year forward earnings multiple of 16.9x, which is just above its 10-year median of 16.2x, but at a huge discount to the industry average of 29.9x.
Target also pays a generous dividend yield of 3.1%, really sweetening the deal for shareholders.
Image Source: Zacks Investment Research
Bottom Line
For investors interested in taking a bet on the resilience of the US consumer these two stocks offer two different approaches. The TJX Companies is a steady compounder, while Target looks like a value play.