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E-Commerce Continues to Boost Retail Sector: 5 Stocks to Buy

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The retail sector is slowly trying o get back on its feet after taking a beating in the initial months of the pandemic. According to Mastercard SpendingPulse, U.S. retail sales grew year over year in March for the second consecutive month, driven by e-commerce.

E-commerce has been helping the retail sector all throughthe pandemic and will continue to play a key role in the long term, as more people continue to shop online. In fact, e-commerce is generating maximum revenues for most retail manufacturers, as people are still skeptical about visiting physical stores.

Retail Sales Grow in March

Per the latest Mastercard SpendingPulse report, U.S. retail sales excluding automotive and gasoline jumped 26.3% on a year-over-year basis in March. The robust growth was driven by online sales that grew 56.8% on a year-over-year basis. 

One of the major reasons behind this rise in people starting to spend more freely in March as the stimulus checks started reaching millions. This was evident from the way people spent in the second half of the month compared to the first. In the first half of March, retail sales grew a meager 1.6% on a year-over-year basis. However, in the second half, sales jumped 46.9%.

However, the spending pattern was quite different in March compared to a year ago. In March 2020, people had spent more on grocery and other necessities, while consumer discretionary sectors like apparel and jewelry took a hit. This year, since the situation is somewhat better, people have spent more on apparel and jewelry, while grocery took a backseat.

E-Commerce Proving Its Dominance

Last year marked yet another landmark for e-commerce, which has been giving stiff competition to the brick-and-mortar stores. The pandemic saw more people shopping online on fears of contracting the virus. This has seen retailers stressing on expanding their e-commerce arm.

Another big change has been the growing popularity of curbside pickup, thanks again to the pandemic. The concept of BOPIS (Buy Online Pick-Up in Store) gained popularity and is likely to be a preferred choice for millions given the convenience and safety it offers.

E-commerce has been saving the retail sector for quite some and given that people are finding it more comfortable shopping online, the trend is likely to stay.

Our Choices

New cases of COVID-19 have somewhat been on the decline and three vaccines are already in the market. Nonetheless, online shopping will continue to be a safe bet for millions given its safety and convenience. This is thus the right opportunity to invest in retail stocks that have a strong online presence.

Tapestry, Inc. (TPR - Free Report) is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The company offers lifestyle products, which include handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 60 days. Tapestry carries a Zacks Rank #2 (Buy).

L Brands, Inc. (LB - Free Report) evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products. 

The company’s expected earnings growth rate for next year is 39.6%. The Zacks Consensus Estimate for current-year earnings has improved 41.2% over the past 60 days. L Brands sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings, Inc. (BOOT - Free Report)  operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. 

The company’s expected earnings growth rate for the current year is 3.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 60 days. The company carries a Zacks Rank #2.

Conns, Inc. (CONN - Free Report) sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma and LCD televisions, camcorders, VCRs, DVD players and home theater products.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 25.4% over the past 60 days. The company sports a Zacks Rank #1.

Five Below, Inc. (FIVE - Free Report) is a specialty value chain retailer that provides a wide range of premium quality and trendy merchandise for $5 or below. 

The company’s expected earnings growth rate for the current year is 96.7%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. Five Below carries a Zacks Rank #2.

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