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4 Retail Stocks Up More Than 30% YTD & Still Showing Vigor

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While coronavirus-inflicted challenges persist, a constructive economic policy is playing a key role in steering the market for now. We note that major indices — the Dow Jones and the S&P 500 — hit a new 52-week high of 33,617.95 and 4,083.42, respectively, on Apr 5. So far in the year, the indices have appreciated approximately 9.5% and 8.6%, respectively. It is quite apparent that the two-pronged approach of massive coronavirus stimulus package of $1.9 trillion and mass vaccination is acting as tailwind.

Without doubt, the pandemic severely impacted industries across the board, taking a toll on employment and household income, thus sending the economy into a tailspin.

Nonetheless, measures undertaken to support households, firms and financial market coupled with the resumption of commercial and industrial activities have provided much needed impetus to the market. The stunning addition of 916,000 jobs in March and the decline in unemployment rate to 6% from 6.2% in February signal that the economy is gradually healing. We also believe that Biden's $2 trillion infrastructure plan will revitalize the economy and help create more jobs.

Well for now, easing of COVID-induced restrictions and with people back on streets, consumer spending activity — one of the pivotal factors of the economy — is likely to regain momentum. In fact, U.S. retail sales are projected to increase 6.5-8.2% to more than $4.33 trillion in 2021, per National Retail Federation (NRF). NRF President and CEO Matthew Shay said, “Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending.”

Evidently, retailers look well-poised to tap any rise in demand. In this respect, companies have been focusing on product strategy to resonate well with customers and advancing omni-channel capabilities. They have been directing resources toward digital platforms in order to better engage with customers, accelerating fleet optimization initiative and augmenting supply chain.

That said, we have highlighted four stocks from the Retail – Wholesale sector that have gained more than 30% year to date and look well positioned based on their sound fundamentals and earnings growth prospects. These stocks have either 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 Year-to-Date

4 Prominent Picks

L Brands, Inc.’s (LB - Free Report) sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives makes it a potential pick. Notably, the company continues to revamp its business by improving store experience, localizing assortments and enhancing its direct business. The company recently raised earnings view for first-quarter fiscal 2021 courtesy of improved sales trends. Incidentally, the company now envisions earnings between 85 cents and $1.00 per share for the first quarter, up from the earlier-guided band of 55-65 cents. The stock has a Zacks Rank #1 and a VGM Score of A. This specialty retailer of women’s intimate and other apparel, beauty, and personal care products has a trailing four-quarter earnings surprise of 479.7%, on average. It has a long-term earnings growth rate of 13%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates an improvement of 15.9% and 39.6%, respectively, from the year-ago period.

You may invest in Boot Barn Holdings, Inc. (BOOT - Free Report) , which has a Zacks Rank #2 and a VGM Score of A. This lifestyle retailer of western and work-related footwear, apparel and accessories has been successfully navigating through the challenging environment, courtesy of merchandising strategies, omni-channel capabilities and better expense management. Impressively, the company has a trailing four-quarter earnings surprise of 23.1%, on average. The company has an estimated long-term earnings growth rate of 20%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 2.1% and 3.2%, respectively, from the prior-year period.

Tapestry, Inc. (TPR - Free Report) is also a solid bet. This provider of luxury accessories and branded lifestyle products is poised to benefit from its Acceleration Program aimed at transforming into a leaner and more responsive organization as well as building significant data and analytics capabilities with focus on enhancing digital and omnichannel capabilities. Notably, the company’s compelling pricing strategy, smaller format locations and cost-effective global sourcing model have been contributing to store productivity. These strategies are likely to drive sales and margins. Impressively, Tapestry has a trailing four-quarter earnings surprise of 39.5%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 10% and a VGM Score of B. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates growth of 9.6% and 162.9%, respectively, from the prior-year period.

The Buckle, Inc. (BKE - Free Report) is worth betting on. The company has managed to deliver monthly sales increase, despite a tough retail landscape. It has been witnessing strength in the online business amid the pandemic. Markedly, online sales surged 81.5% in fourth-quarter fiscal 2020. Additionally, momentum in the youth business owing to evolution of the Mini Me assortment appears encouraging. Also, the company’s women’s and men’s merchandise categories have been performing well. This apparel, footwear and accessories retailer has witnessed a positive earnings surprise in the last reported quarter. The stock currently 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 8.3% and 3.4%, respectively, from the year-ago period.

Zacks Top 10 Stocks for 2021

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In-Depth Zacks Research for the Tickers Above


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Boot Barn Holdings, Inc. (BOOT) - free report >>

Buckle, Inc. The (BKE) - free report >>

L Brands, Inc. (LB) - free report >>

Tapestry, Inc. (TPR) - free report >>