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4 Retail Stocks That Appear to be Solid Bets for 2H23
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Inflation and recession fears seem to have taken a backseat for the time being with the S&P 500 entering bullish territory. Investors are keeping a close watch on the outcome of the two-day policy meet ending Wednesday. With inflation easing further in May, the probability of a rate hike looks slim. If the Federal Reserve chooses to pause rate hikes for now, it would only add to the positive sentiment prevailing in the market.
We note that the consumer price index rose just 0.1% on a sequential basis in the month of May. The index climbed 4% on a year-over-year basis, at a slower rate when compared with April’s reading of 4.9%. Markedly, this was the lowest year-on-year increase since March 2021, when inflation rose 2.6%.
What is further elevating investor sentiment is the U.S. labor market. The current job data is defying claims of the economy being in a recessionary mode. The U.S. Labor Department informed that employers added 339,000 jobs last month, surpassing the market’s expectation and higher than April’s upwardly revised reading of 294,000 jobs. Meanwhile, average hourly earnings increased 0.3%, while the same rose 4.3% on an annual basis.
If all goes well, the second half of 2023 looks promising. Any improvement in the economy would fill investors with enthusiasm. Investors should place their bets on stocks with strong fundamentals. That said, we have highlighted four stocks from the Retail – Wholesale sector. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price Performance: Past One Year
Image Source: Zacks Investment Research
4 Prominent Picks
You may invest in Urban Outfitters, Inc. (URBN - Free Report) . This leading lifestyle products and services company seems a promising bet due to its solid business strategies and sound fundamentals. Management has been strengthening its direct-to-consumer business, enhancing productivity across the existing channels and optimizing inventory levels. URBN’s strategic growth initiative, FP Movement, and store-growth endeavors are also impressive.
The Zacks Consensus Estimate for Urban Outfitters’ current-fiscal sales and EPS suggests growth of 5.1% and 57.1%, respectively, from the year-ago reported figure. This Zacks Rank #1 stock has an estimated long-term earnings growth rate of 18%. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Investors can count on Abercrombie & Fitch Co. (ANF - Free Report) . The company has been making strategic investments across stores, digital and technology to drive top and bottom-line growth. The company also remains on track with its 2025 Always Forward Plan. Moreover, a strong balance sheet allows it to navigate the current macroeconomic environment.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 480.6%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.3% and 732%, respectively, from the year-ago period. ANF presently sports a Zacks Rank #1.
Tecnoglass Inc. (TGLS - Free Report) is also worth betting on. The company is likely to benefit from stellar demand for single-family residential and multifamily/commercial products. The company is also encouraged by the continued expanding backlog that reflects an increasing number of projects in commercial pipeline with visibility well into 2024. TGLS has been making investments in strategic automation and capacity enhancements.
The Zacks Consensus Estimate for TGLS’s current-fiscal sales and EPS suggests growth of 18.1% and 23.8%, respectively, from the year-ago reported figure. This Zacks Rank #1 stock has a trailing four-quarter earnings surprise of 22.7%, on average.
Fastenal Company (FAST - Free Report) , another potential pick, is the leader in the wholesale distribution of industrial and construction supplies. Despite a slower macro environment and reduced customer spending, Fastenal’s decent large customers, digital strategy, onsite/offsite mix and market share gains across its product categories are expected to drive growth.
The Zacks Consensus Estimate for Fastenal Company’s current-fiscal sales and EPS suggests growth of 5.4% and 4.8%, respectively, from the year-ago reported figure. This Zacks Rank #2 stock has an estimated long-term earnings growth rate of 9%. FAST delivered a trailing four-quarter earnings surprise of 3.2%, on average.
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4 Retail Stocks That Appear to be Solid Bets for 2H23
Inflation and recession fears seem to have taken a backseat for the time being with the S&P 500 entering bullish territory. Investors are keeping a close watch on the outcome of the two-day policy meet ending Wednesday. With inflation easing further in May, the probability of a rate hike looks slim. If the Federal Reserve chooses to pause rate hikes for now, it would only add to the positive sentiment prevailing in the market.
We note that the consumer price index rose just 0.1% on a sequential basis in the month of May. The index climbed 4% on a year-over-year basis, at a slower rate when compared with April’s reading of 4.9%. Markedly, this was the lowest year-on-year increase since March 2021, when inflation rose 2.6%.
What is further elevating investor sentiment is the U.S. labor market. The current job data is defying claims of the economy being in a recessionary mode. The U.S. Labor Department informed that employers added 339,000 jobs last month, surpassing the market’s expectation and higher than April’s upwardly revised reading of 294,000 jobs. Meanwhile, average hourly earnings increased 0.3%, while the same rose 4.3% on an annual basis.
If all goes well, the second half of 2023 looks promising. Any improvement in the economy would fill investors with enthusiasm. Investors should place their bets on stocks with strong fundamentals. That said, we have highlighted four stocks from the Retail – Wholesale sector. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price Performance: Past One Year
Image Source: Zacks Investment Research
4 Prominent Picks
You may invest in Urban Outfitters, Inc. (URBN - Free Report) . This leading lifestyle products and services company seems a promising bet due to its solid business strategies and sound fundamentals. Management has been strengthening its direct-to-consumer business, enhancing productivity across the existing channels and optimizing inventory levels. URBN’s strategic growth initiative, FP Movement, and store-growth endeavors are also impressive.
The Zacks Consensus Estimate for Urban Outfitters’ current-fiscal sales and EPS suggests growth of 5.1% and 57.1%, respectively, from the year-ago reported figure. This Zacks Rank #1 stock has an estimated long-term earnings growth rate of 18%. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Investors can count on Abercrombie & Fitch Co. (ANF - Free Report) . The company has been making strategic investments across stores, digital and technology to drive top and bottom-line growth. The company also remains on track with its 2025 Always Forward Plan. Moreover, a strong balance sheet allows it to navigate the current macroeconomic environment.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 480.6%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.3% and 732%, respectively, from the year-ago period. ANF presently sports a Zacks Rank #1.
Tecnoglass Inc. (TGLS - Free Report) is also worth betting on. The company is likely to benefit from stellar demand for single-family residential and multifamily/commercial products. The company is also encouraged by the continued expanding backlog that reflects an increasing number of projects in commercial pipeline with visibility well into 2024. TGLS has been making investments in strategic automation and capacity enhancements.
The Zacks Consensus Estimate for TGLS’s current-fiscal sales and EPS suggests growth of 18.1% and 23.8%, respectively, from the year-ago reported figure. This Zacks Rank #1 stock has a trailing four-quarter earnings surprise of 22.7%, on average.
Fastenal Company (FAST - Free Report) , another potential pick, is the leader in the wholesale distribution of industrial and construction supplies. Despite a slower macro environment and reduced customer spending, Fastenal’s decent large customers, digital strategy, onsite/offsite mix and market share gains across its product categories are expected to drive growth.
The Zacks Consensus Estimate for Fastenal Company’s current-fiscal sales and EPS suggests growth of 5.4% and 4.8%, respectively, from the year-ago reported figure. This Zacks Rank #2 stock has an estimated long-term earnings growth rate of 9%. FAST delivered a trailing four-quarter earnings surprise of 3.2%, on average.