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E-Commerce Powering Retail Rebound: 5 Solid Stocks to Buy
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E-commerce is growing faster than it was expected, thanks to the pandemic that changed the shopping habits of millions. Although e-commerce was growing at a fast pace, people finally realized the convenience and security associated with this mode only after they were compelled to shop online on fears of contracting COVID-19.
This also has been helping the retail sector as the majority of the sales are now happening online. Given this scenario, stocks with a strong online presence like Vera Bradley, Inc. (VRA - Free Report) , Ulta Beauty, Inc. (ULTA - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) , Ross Stores, Inc. (ROST - Free Report) and Five Below, Inc. (FIVE - Free Report) are expected to benefit in the near term.
E-Commerce Continues to Grow
According to the Department of Commerce, e-commerce sales in the United States broke the $1 trillion threshold for the first time and totaled $1.02 trillion in the past 12 months in November. This comes despite soaring commodity prices that have been hampering sales for months now.
Even then, online sales are projected to grow 9% in 2022. E-commerce has been playing a major role in driving overall retail sales amid struggles this year. Online sales were particularly on the rise in the third quarter.
According to the Census Bureau, retail sales totaled $1,792 billion in the third quarter, up 0.7% over the second quarter. Online sales rose 10.8% year over year and 3% month over month to reach $265.9 billion.
Moreover, e-commerce accounted for 14.8% of overall retail sales in the third quarter.
This comes as Adobe Analytics reported that Black Friday and Cyber Monday sales hit record highs this year, marking a great start to the holiday season. According to the report, Cyber Monday sales increased 5.8% year over year, totaling $11.3 billion. Cyber Monday sales were $10.7 billion in 2021 and $10.8 billion in 2020, respectively. The sales figures for this year set a new record after declining 1.4% in 2021.
Online purchases on Black Friday surpassed $9.12 billion, also setting a record. Overall e-commerce sales on Black Friday were up 2.3% from the prior year. In 2020, Black Friday sales came in at $9.03 billion.
E-commerce growth has been enormous over the past two years. Although the pandemic gave it a boost, the trend has since continued. In fact, it was earlier predicted that e-commerce spending would reach $1 trillion in 2024, but the goal has already been met this year, demonstrating the enormous potential.
Clearly, the market has doubled in size in just three years. Spending on online purchases has increased by 25% from the pre-pandemic levels. Had the pandemic not struck and the market continued to expand at its long-term growth rate of 14% to 15%, total online sales would have been around $815 billion, down about $200 billion.
Our Choices
Given this scenario, it would be wise to invest in these four stocks with a strong online presence. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vera Bradley, Inc. is a designer, producer, marketer and retailer of accessories for women. VRA’s products include handbags, accessories and travel and leisure items. Vera Bradley sells its products through two reportable segments — Indirect and Direct.
Vera Bradley’sexpected earnings growth rate for next year is 33.3%. The Zacks Consensus Estimate for current-year earnings has improved 26.3% over the past 30 days. VRA presently sports a Zacks Rank #1.
Ulta Beauty, Inc. offers a wide range of products including cosmetics, fragrance, skincare, hair care, bath and body products, and salon styling tools in stores. ULTA sells more than 25,000 products from about 500 well-established and emerging beauty brands across all categories and price points.
Ulta Beauty’s expected earnings growth rate for next year is 6.3%. The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the past 30 days. ULTA presently has a Zacks Rank #2.
Urban Outfitters, Inc. is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products. URBN’s merchandise is generally sold directly to consumers through stores, catalogs, call centers and e-commerce platforms.
Urban Outfitters’ expected earnings growth rate for next year is 28.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 30 days. Currently, URBN has a Zacks Rank #2.
Ross Stores, Inc. operates as an off-price retailer of apparel and home accessories, primarily in the United States. ROST operates its stores under the Ross Dress for Less (Ross) and dd’s DISCOUNTS names. Ross Stores’ outlets are located mostly in community and neighborhood shopping centers in heavily populated urban and suburban areas.
Ross Stores’ expected earnings growth rate for next year is 14.4%. The Zacks Consensus Estimate for current-year earnings has improved 7.5% over the past 30 days. ROST presently sports a Zacks Rank #1.
Five Below, Inc. is a specialty value chain retailer that provides a wide range of premium quality and trendy merchandise for $5 or below. FIVE mainly targets teenagers or pre-teen shoppers for its products which include certain brands and licensed merchandise. Notably, these products belong to categories such as Style, Room, Sports, Tech, Create, Party, Candy and Now.
Five Below’s expected earnings growth rate for next year is 22.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 30 days. FIVE presently carries a Zacks Rank #2.
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E-Commerce Powering Retail Rebound: 5 Solid Stocks to Buy
E-commerce is growing faster than it was expected, thanks to the pandemic that changed the shopping habits of millions. Although e-commerce was growing at a fast pace, people finally realized the convenience and security associated with this mode only after they were compelled to shop online on fears of contracting COVID-19.
This also has been helping the retail sector as the majority of the sales are now happening online. Given this scenario, stocks with a strong online presence like Vera Bradley, Inc. (VRA - Free Report) , Ulta Beauty, Inc. (ULTA - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) , Ross Stores, Inc. (ROST - Free Report) and Five Below, Inc. (FIVE - Free Report) are expected to benefit in the near term.
E-Commerce Continues to Grow
According to the Department of Commerce, e-commerce sales in the United States broke the $1 trillion threshold for the first time and totaled $1.02 trillion in the past 12 months in November. This comes despite soaring commodity prices that have been hampering sales for months now.
Even then, online sales are projected to grow 9% in 2022. E-commerce has been playing a major role in driving overall retail sales amid struggles this year. Online sales were particularly on the rise in the third quarter.
According to the Census Bureau, retail sales totaled $1,792 billion in the third quarter, up 0.7% over the second quarter. Online sales rose 10.8% year over year and 3% month over month to reach $265.9 billion.
Moreover, e-commerce accounted for 14.8% of overall retail sales in the third quarter.
This comes as Adobe Analytics reported that Black Friday and Cyber Monday sales hit record highs this year, marking a great start to the holiday season. According to the report, Cyber Monday sales increased 5.8% year over year, totaling $11.3 billion. Cyber Monday sales were $10.7 billion in 2021 and $10.8 billion in 2020, respectively. The sales figures for this year set a new record after declining 1.4% in 2021.
Online purchases on Black Friday surpassed $9.12 billion, also setting a record. Overall e-commerce sales on Black Friday were up 2.3% from the prior year. In 2020, Black Friday sales came in at $9.03 billion.
E-commerce growth has been enormous over the past two years. Although the pandemic gave it a boost, the trend has since continued. In fact, it was earlier predicted that e-commerce spending would reach $1 trillion in 2024, but the goal has already been met this year, demonstrating the enormous potential.
Clearly, the market has doubled in size in just three years. Spending on online purchases has increased by 25% from the pre-pandemic levels. Had the pandemic not struck and the market continued to expand at its long-term growth rate of 14% to 15%, total online sales would have been around $815 billion, down about $200 billion.
Our Choices
Given this scenario, it would be wise to invest in these four stocks with a strong online presence. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vera Bradley, Inc. is a designer, producer, marketer and retailer of accessories for women. VRA’s products include handbags, accessories and travel and leisure items. Vera Bradley sells its products through two reportable segments — Indirect and Direct.
Vera Bradley’sexpected earnings growth rate for next year is 33.3%. The Zacks Consensus Estimate for current-year earnings has improved 26.3% over the past 30 days. VRA presently sports a Zacks Rank #1.
Ulta Beauty, Inc. offers a wide range of products including cosmetics, fragrance, skincare, hair care, bath and body products, and salon styling tools in stores. ULTA sells more than 25,000 products from about 500 well-established and emerging beauty brands across all categories and price points.
Ulta Beauty’s expected earnings growth rate for next year is 6.3%. The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the past 30 days. ULTA presently has a Zacks Rank #2.
Urban Outfitters, Inc. is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products. URBN’s merchandise is generally sold directly to consumers through stores, catalogs, call centers and e-commerce platforms.
Urban Outfitters’ expected earnings growth rate for next year is 28.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 30 days. Currently, URBN has a Zacks Rank #2.
Ross Stores, Inc. operates as an off-price retailer of apparel and home accessories, primarily in the United States. ROST operates its stores under the Ross Dress for Less (Ross) and dd’s DISCOUNTS names. Ross Stores’ outlets are located mostly in community and neighborhood shopping centers in heavily populated urban and suburban areas.
Ross Stores’ expected earnings growth rate for next year is 14.4%. The Zacks Consensus Estimate for current-year earnings has improved 7.5% over the past 30 days. ROST presently sports a Zacks Rank #1.
Five Below, Inc. is a specialty value chain retailer that provides a wide range of premium quality and trendy merchandise for $5 or below. FIVE mainly targets teenagers or pre-teen shoppers for its products which include certain brands and licensed merchandise. Notably, these products belong to categories such as Style, Room, Sports, Tech, Create, Party, Candy and Now.
Five Below’s expected earnings growth rate for next year is 22.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 30 days. FIVE presently carries a Zacks Rank #2.