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5 Retail Stocks in Focus as Americans Look Confident Now

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After back-to-back monthly declines, U.S. consumer confidence — a key determinant of the economy’s health — improved moderately in January. While the level remained well below the pre-pandemic mark, the uptick indicates that Americans feel a bit confident now regarding the labor market and the overall economic environment. Undeniably, the government’s timely intervention to provide financial assistance and the distribution of COVID-19 vaccines did manage to allay some apprehensions.

Per the Conference Board, the Consumer Confidence Index increased to 89.3 in January from December’s revised reading of 87.1. The index remained well below the October’s mark of 101.4 and the February’s pre-pandemic level of 132.6. Lynn Franco, senior director of economic indicators at the Conference Board said, “Consumers’ expectations for the economy and jobs, however, advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future.”

Clearly, the last-minute deal on a $900-billion stimulus package has given the economy a new lease of life. This second economic-rescue measure will definitely provide some financial relief to millions of households and corporates that have been struggling after the initial coronavirus-relief package started to dry up. Moreover, President Joe Biden has proposed a $1.9 trillion COVID-19 relief plan that includes additional direct payments of $1,400 to eligible Americans on top of the $600 being distributed currently.

Well challenges will be present in 2021, as strains of coronavirus pandemic will not fade out soon. But a constructive economic policy will play a vital role in steering the market in the year ahead. Clearly, stimulus checks for individuals, and mass vaccination will help shore up the economy. Marked pundits pointed that if business organizations and industries started to operate at an optimum level it could potentially ramp up hiring activity, and in turn persuade consumers to spend freely.

That said here we have highlighted five stocks from Retail-Wholesale sector that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance in Past Six Months

5 Prominent Picks

The Michaels Companies, Inc.’s expanded omnichannel capabilities, customized marketing strategy and Maker-centric branding makes it a potential pick. The stock has a Zacks Rank #1 and a VGM Score of A. This specialty provider of arts, crafts, framing, floral, and seasonal merchandise for Makers and do-it-yourself home decorators has a trailing four-quarter earnings surprise of 54.1%, on average. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates an improvement of 2.1% and 5.2%, respectively, from the year-ago period.

Rite Aid Corporation (RAD - Free Report) is worth betting on. The company has been benefiting from the expansion of services to its customers amid the COVID-19 crisis. It has been providing home service delivery to customers with an eligible prescription. Some other notable efforts include revamping more than 700 stores, opening of three new Store of the Future prototypes and integrating two legacy PBMs. The stock currently has a Zacks Rank #1 and a VGM Score of B. The bottom line of this operator of chain of retail drugstores has outperformed the Zacks Consensus Estimate in the last three reported quarters. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 10.2% and 326.7%, respectively, from the year-ago period.

You may invest in DICK'S Sporting Goods, Inc. (DKS - Free Report) , which has a Zacks Rank #2 and a VGM Score of A. Favorable customer demand, a solid product portfolio and strength in the online platform have been contributing to the company’s upbeat performance. The company has been witnessing significant growth across its core categories, including hardlines, apparel and footwear. Notably, it has been undertaking technology enhancements to provide customers seamless omni-channel experience. The sporting goods retailer has a trailing four-quarter earnings surprise of 34.7%, on average. It has a long-term earnings growth rate of 5.6%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates growth of 8.1% and 57.5%, respectively, from the prior-year period.

Investors can also count on Target Corporation (TGT - Free Report) , a general merchandise retailer in the United States. The company has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide seamless shopping experience. Its impressive holiday sales performance is a testament to the same. The company has a trailing four-quarter earnings surprise of 52.4%, on average. It has a long-term earnings growth rate of 8.5%. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 18.8% and 42.6%, respectively, from the year-ago period.

Lowe's Companies, Inc. (LOW - Free Report) is also a solid bet. Prudent measures to widen assortments and omnichannel capabilities have helped the company to emerge into a strong player. Its latest Total Home strategy aims to provide everything that homeowners need for renovation and remodeling work in every area of the house. The offerings are likely to benefit both Pro and DIY (do-it-yourself) customers. Impressively, this home improvement retailer has a trailing four-quarter earnings surprise of 16.2%, on average. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates growth of 22.6% and 52.3%, respectively, from the year-ago period.

Zacks Top 10 Stocks for 2021

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