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4 Retail Stocks That More Than Doubled in 2021

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In spite of lingering apprehensions associated with the coronavirus crisis, the Retail – Wholesale sector has emerged strongly. The pandemic and associated lockdowns did wreak havoc but things started to turn in favor following the stimulus package, mass inoculation and resumption of business activities. Well, rebounding economy, improving job prospects and consumers’ increasing appetite for shopping have been contributing factors.

The pandemic has reshaped almost every other sector, compelling them to rewrite the rules of game and transforming the business processes. The Retail – Wholesale sector has not been an exception. While inventory management, supply chain enhancement and cost structure realignment have been part & parcel of business strategies, investment to accelerate digitization has been gaining immense importance.

Companies have also been introducing innovative products and brands, enhancing warehouse and distribution networks, and undertaking a more consumer-centric approach. They have been emphasizing on upgradation of store and omni-channel capabilities, shopping via mobile app, and last-mile delivery solutions. Curbside pickup or ship-to-home orders and contactless payment solutions have been a boon amid the pandemic.

Undoubtedly, the sector’s prospects are correlated with the purchasing power of consumers. Consumer spending activity, which is one of the pivotal factors driving the economy, has been strong. There is growing eagerness among consumers to venture out and shop. The National Retail Federation envisions retail sales to increase between 10.5% and 13.5% to an estimated $4.44 trillion to $4.56 trillion in the current year. For the first 11 months, sales were up 14.2% year over year, per the retail trade group.

Meanwhile, per the latest Zacks Earnings Outlook, the Retail – Wholesale sector is anticipated to witness top-line growth of 11.2% year over year with the bottom line expected to increase 23.8% in the current financial year. For 2022, the top and bottom lines are projected to improve 7.2% and 13%, respectively. Impressively, the sector currently carries a Zacks Sector Rank #3, and occupies position in the top 19% of 16 Zacks sector list.

That said, we have highlighted four companies from the sector that have seen their stock prices more than double year to date, and still look well-positioned based on their sound fundamentals.

Year-to-Date Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

4 Prominent Picks

Dillard's, Inc. (DDS - Free Report) , which operates retail department stores, is worth betting on. The company has been benefiting from strong consumer demand, effective inventory management and cost containment measures. The aggressive measures to lower excess inventory have been resulting in lower markdowns, thereby boosting gross margin. We note that net sales advanced 44.5% year over year during the third quarter of fiscal 2021. The stock has rallied 325.6% year to date.

Dillard's has a trailing four-quarter earnings surprise of 282%, on average. The Zacks Consensus Estimate for Dillard's fiscal 2022 EPS has moved up 30.2% in the past 60 days. This Zacks Rank #1 (Strong Buy) company has an estimated long-term earnings growth rate of 14.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

You may invest in Signet Jewelers Limited (SIG - Free Report) . The renowned diamond retailer looks quite promising on the back of its sturdy digital endeavors and other robust strategic initiatives, including Inspiring Brilliance. The company boasts a strong portfolio of well-known brands such as Zales, Kay and Jared. As part of the Inspiring Brilliance growth strategy, the company has been expanding brand banners, boosting service revenues, broadening the Accessible Luxury and Value segments and accelerating digital commerce, among others.

Signet has a trailing four-quarter earnings surprise of 77.2%, on average. This Zacks Rank #1 company has an estimated long-term earnings growth rate of 8%. The Zacks Consensus Estimate for Signet's upcoming financial year EPS has risen 5.1% in the past 30 days. The stock has advanced 217.1% year to date.

We suggest betting on Boot Barn Holdings, Inc. (BOOT - Free Report) . 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 as well as marketing. This combined with the expansion of the store base has helped the company gain market share and strengthen its position in the industry.

Impressively, Boot Barn Holdings has a trailing four-quarter earnings surprise of 35.3%, on average. This Zacks Rank #1 company has an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for Boot Barn Holdings’ next financial year EPS has moved north by 1.2% in the past 30 days. We note that the stock has shot up 185% so far in the year.

Macy's, Inc. (M - Free Report) , one of the nation’s premier omnichannel retailers, is also a potential pick. The company has been benefiting from efforts undertaken as part of the Polaris Strategy, including boosting assortments, strengthening customer relations and optimizing store portfolio. Management is on track to strengthen omni-channel capabilities with investments toward online shopping experiences.

Macy's has a trailing four-quarter earnings surprise of 313.5%, on average. This Zacks Rank #3 (Hold) company has an estimated long-term earnings growth rate of 12%. The Zacks Consensus Estimate for Macy's fiscal 2022 EPS has increased 1% in the past 30 days. Notably, the stock has appreciated 132.4% so far in the year.