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E-Commerce Continues to Help Retail Sales: 5 Stocks to Buy

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The retail sector has finally started showing signs of recovery thanks to the second round of stimulus that has given millions more spending power. According to Mastercard SpendingPulse, U.S. retail sales grew year over year in April for the third consecutive month.

The surge in sales was driven by e-commerce given that people are still hesitant about visiting physical stores. Moreover, the ease of shopping online is finally helping the retail sector that had taken a bad hit last year when the pandemic had just struck.

Retail Sales Surge in April

According to the Mastercard SpendingPulse report, retail sales in the United States grew 23.3% in April on a year-over-year basis. Sales had fallen to a record low in April last year when the economy had to be almost shut down after the coronavirus outbreak. Since then, the retail sector has been struggling to get back on its feet.

However, even then retail sales grew 10.8% from April 2019. Spending increased across all categories. Sales at restaurants soared a whopping 118.8% year over year and 5.7% from April 2019. Departmental stores — which witnessed almost no sales last year during this period due to the coronavirus-induced lockdown — also performed well, with jewelry sales increasing 255%

E-Commerce Drive Retail Sales

E-commerce has been playing an important role in supporting the retail sector throughout the pandemic as most people are shopping online. One year down the line, people are more comfortable shopping online because of the ease as well as safety. According to the report, online sales jumped 21.6% in April on a year-over-year basis.

Category-wise, e-commerce made up for 61.7% of the total apparel sales and 21% of department store sales, while 15.7% of jewelry was purchased online.

One of the major reasons behind this surge in retail sales is the enhanced purchasing power thanks to the new round of stimulus checks that has given people the confidence to spend more. Also, more people are getting vaccinated, which is making them feel safer now.

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.

Citi Trends, Inc. (CTRN - Free Report) is a value-priced retailer of urban fashion apparel and accessories for the entire family.

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 85.4% over the past 60 days. Citi Trendssports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Levi Strauss & Co. (LEVI - Free Report) designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands. 

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 14.4% over the past 60 days. Levi Strauss sports a Zacks Rank #1.

Abercrombie & Fitch Company (ANF - Free Report) operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East.

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 4.4% over the past 60 days. Abercrombie & Fitch has a Zacks Rank #1.

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. Conns carries a Zacks Rank #1.

Ethan Allen Interiors Inc. (ETH - Free Report) is a leading interior design company, and manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of the Design Centers in the United States and abroad.

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 26.8% over the past 60 days. Ethan Allen has a Zacks Rank #1.

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