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Snap Up These 5 Retail Stocks as Consumer Confidence Soars

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Americans are way more confident now, thanks to the two-pronged approach of massive stimulus package and mass inoculation drive. Markedly, U.S. consumer confidence — a key determinant of the economy’s health — leaped for the second successive month in April and reached the highest mark since the pandemic gripped the economy. Easing of restrictions and gradual pick-up in economic activities have ushered a sense of confidence with more people returning to work place and the unemployment rate showing signs of improvement.

Undeniably, the government’s timely intervention to provide financial assistance did play a major role in lifting the consumer sentiment. Per the Conference Board, the Consumer Confidence Index jumped to 121.7 in April from March’s revised reading of 109. This marks the highest level since February last year, when the index was at 132.6. Lynn Franco, senior director of economic indicators at The Conference Board said, “Consumers' assessment of current conditions improved significantly in April, suggesting the economic recovery strengthened further in early Q2.”

Certainly, an upbeat sentiment is likely to translate into increased consumer spending, which accounts for more than two-thirds of U.S. economic activity. Any uptick in consumer spending is always a welcome news for retailers. Economists pointed that as business organizations and industries start to operate at an optimum level, it could potentially ramp up hiring activity, and in turn prompt consumers to spend more freely.

Meanwhile, the passing of a coronavirus relief package worth $1.9 trillion that entitles eligible Americans to $1,400 stimulus checks has boosted spending activity across the board. Evidently, U.S. retail and food services sales in March rose 9.8% sequentially to $619.1 billion. Americans flocked to restaurants and bars, bought apparels, spent on gasoline, and purchased sports equipment, furniture and electronics and appliance. Sales at auto dealers were also strong.

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

You may invest in Abercrombie & Fitch Co. (ANF - Free Report) . The company has been trending up the charts, given its investments in omni-channel capabilities as well as marketing, data and analytics, and prudent inventory management strategies. Moreover, it has been benefiting from an increased focus on EMEA and APAC regions. Additionally, the company is gaining from strong digital sales, up 34% year over year in fourth-quarter fiscal 2020. This along with store-optimization plans is likely to act as a catalyst in the near term. The stock has a Zacks Rank #1 and a VGM Score of A. This specialty retailer has a trailing four-quarter earnings surprise of 404.9%, on average. It has a long-term earnings growth rate of 18%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 11.9% and 294.5%, respectively, from the year-ago period.

We also suggest betting on AutoNation, Inc. (AN - Free Report) , which operates as an automotive retailer in the United States. The company’s diversified product mix, large dealer network and store expansion efforts bode well. Markedly, the company has been making investments to enhance its digital capabilities. It significantly upgraded its AutoNation Express integrated retailing solution. Impressively, this Fort Lauderdale, FL-based company has a trailing four-quarter earnings surprise of 103.6%, on average. The stock has a Zacks Rank #1 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 16.1% and 34.1%, respectively, from the year-ago period. It has a long-term earnings growth rate of 12.3%.

Investors can also count on MarineMax, Inc. (HZO - Free Report) . The company’s strategic investments in high-margin businesses such as finance, insurance, brokerage, marina and service operations bode well. Markedly, the company’s significant geographic reach and product diversification coupled with digitization endeavors have been contributing to its performance. Also, the company has been benefiting significantly as consumers embrace and enjoy the boating lifestyle. Moreover, a greater number of existing customers are upgrading to larger and newer boats. Impressively, this recreational boat and yacht retailer has a trailing four-quarter earnings surprise of 125.8%, on average. The stock has a Zacks Rank #1 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 33.9% and 53.2%, respectively, from the year-ago period.

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. Last month, the company raised earnings view for first-quarter fiscal 2021 courtesy of improved sales trends. Incidentally, it 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 #2 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 41.3%, respectively, from the year-ago period.

Macy's, Inc. (M - Free Report) , one of the nation’s premier omni-channel retailers, is worth betting on. In spite of a tough retail landscape, the company has managed to stay afloat, courtesy of its Polaris Strategy. The strategy includes rationalizing store base, revamping assortments as well as managing costs prudently. Markedly, customers have been responding well toward the company’s expanded omni-channel offerings such as curbside, store pickup and same-day delivery. In this respect, its tie-up with DoorDash for expediting delivery service is encouraging. The company also collaborated with Sweden-based buy-now, pay-later group — Klarna — for offering online shoppers financial ease and payment flexibility. Additionally, the company is constantly improving its mobile and website features to deliver enhanced shopping experience. Impressively, this New York-based company has a trailing four-quarter earnings surprise of 116.6%, on average. The stock with a Zacks Rank #2 and a VGM Score of A has a long-term earnings growth rate of 12%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 20.2% and 134.4%, respectively, from the year-ago period.

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