The strategy to sell products at discounted prices has been helping players in the
Retail – Discount Stores industry to attract customers, who have been seeking both value and convenience. Under the current circumstances, people in the low-to-middle income groups have been showing preference for discount stores. Clearly, results for this earnings season are expected to reflect gains from constant omnichannel initiatives, brand introduction, store expansion and remodeling, and efforts to enhance delivery services. Meanwhile, the passing of a coronavirus relief package worth $1.9 trillion that entitles eligible Americans to $1,400 stimulus checks is likely to have triggered spending across the board. Well, demand was not restricted to a few categories as was noticed when the pandemic hit the economy. Instead, the easing COVID-19 restrictions, thanks to a rapid inoculation drive and the return to active social lifestyle, events and occasions are likely to have spurred demand for traditional categories. However, we note that industry participants that have been gaining amid the pandemic-led increased at-home consumption and stock hoarding are likely to have witnessed some pullback in demand. Nonetheless, keeping consumers’ product preferences and growing inclination toward online shopping in mind, retailers have been replenishing shelves with in-demand merchandise and ramping up investments in digitization. To beat the COVID-19 blues, companies have been directing resources toward advancing omnichannel capabilities, enhancing supply chain and providing faster delivery options, be it curbside pickup or delivery at home, in order to better engage with customers. Clearly, the aforementioned factors raise optimism about the outcome of the results. However, margins remain an area to watch. Impact of investments to increase teams’ pay and benefits, and expenses on additional safety and cleansing measures due to the coronavirus pandemic on margins cannot be ruled out. Apart from these, any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have put more pressure on margins. Making the Perfect Choice
Our research shows that for stocks with the combination of a positive
Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 5 Prominent Picks Target Corporation ( TGT Quick Quote TGT - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +7.42%, is a solid bet. The Zacks Consensus Estimate for its first-quarter fiscal 2021 earnings is pegged at $2.09, suggesting growth of 254.2% from the prior-year quarter. Also, the consensus estimate for earnings has moved up by 1% in the past 30 days. This general merchandise retailer has a trailing four-quarter earnings surprise of 53.3%, on average. The company is slated to announce results on May 19. You can see . the complete list of today’s Zacks #1 Rank stocks here
You may consider
Dollar Tree, Inc. ( DLTR Quick Quote DLTR - Free Report) , which operates discount variety retail stores. The stock has a Zacks Rank #3 and an Earnings ESP of +1.40%. The Zacks Consensus Estimate for its first-quarter fiscal 2021 earnings is pegged at $1.36, which suggests an improvement of 30.8% from the prior-year quarter. Also, the Zacks Consensus Estimate for its quarterly earnings has moved up by a penny in the past 30 days. The company has a trailing four-quarter earnings surprise of 16.8%, on average. Ross Stores, Inc. ( ROST Quick Quote ROST - Free Report) also deserves a mention. The stock has a Zacks Rank #3 and an Earnings ESP of +7.23%. The Zacks Consensus Estimate for its first-quarter fiscal 2021 earnings is pegged at 86 cents, indicating an improvement from a loss of 29 cents reported in the prior-year quarter. Also, the consensus estimate for earnings has increased by a couple of cents in the past 30 days. Notably, this operator of off-price retail apparel and home fashion stores is scheduled to report results on May 20. The TJX Companies, Inc. ( TJX Quick Quote TJX - Free Report) , with a Zacks Rank #3 and an Earnings ESP of +11.80%, is also worth betting on. The Zacks Consensus Estimate for its first-quarter fiscal 2022 earnings is pegged at 28 cents, suggesting an improvement from a loss of 74 cents reported in the prior-year quarter. Also, the consensus estimate for earnings has increased by a penny over the past 30 days. This off-price retailer of apparel and home fashions is slated to report results on May 19.
Investors can even count on
Costco Wholesale Corporation ( COST Quick Quote COST - Free Report) , an operator of membership warehouses, with a Zacks Rank #3 and an Earnings ESP of +3.12%. The Zacks Consensus Estimate for its third-quarter fiscal 2021 earnings stands at $2.27, indicating an improvement of 20.1% from the year-ago period. Also, the Zacks Consensus Estimate for quarterly earnings has risen by 1.3% in the past seven days. The company has a trailing four-quarter earnings surprise of 2.2%, on average. The company is slated to announce results on May 27. Zacks Top 10 Stocks for 2021
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