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4 Stocks Worth Considering as Retail Sales Rise in May
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Inflation and recession fears seem to have taken a backseat for the time being, as U.S. retail sales again witnessed a positive trend in May. Consumer spending activity, one of the pivotal factors driving the economy, held up well last month, as Americans spent more on motor vehicles and building materials.
The Commerce Department reported a sequential increase of 0.3% in U.S. retail and food services sales for May, reaching a total of $686.6 billion. This follows a revised reading of a 0.4% increase registered in April. Impressively, May retail sales rose 1.6% from the year-ago period.
Currently, consumers are breathing a sigh of relief, owing to the decisive actions taken by the Federal Reserve to address inflationary headwinds. The Fed’s latest decision to temporarily pause the rate hike has bolstered the positive sentiment in the market.
Adding to the already buoyant 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. Furthermore, average hourly earnings increased 0.3%, while the same rose 4.3% on an annual basis.
Before delving into the stocks, let's take a look at the sales figures across different categories.
Category-Wise Sales
The Commerce Department’s report suggests that sales at motor vehicle & parts dealers and furniture & home furnishings stores increased 1.4% and 0.4%, respectively, on a sequential basis. Sales at electronics & appliance stores rose 0.2%, while the same at building material & supplies dealers increased 2.2%. Again, sales at non-store retailers were up 0.3%.
Sales at food & beverage stores climbed 0.3%, while at food services & drinking places, it grew 0.4%. At sporting goods, hobby, musical instrument, & book stores, sales advanced 0.3%, while the same at general merchandise stores rose 0.4%.
Sales at clothing & clothing accessories outlets and health & personal care stores remained flat. The report also indicated a decline of 1% in sales at miscellaneous store retailers. Meanwhile, receipts at gasoline stations were down 2.6%.
Price Performance: Past One Year
Image Source: Zacks Investment Research
4 Prominent Picks
You may invest in Urban Outfitters. 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. 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 3.4% and 732%, respectively, from the year-ago period. ANF presently sports a Zacks Rank #1.
Tecnoglass 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 18.2% and 25%, 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, 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 Stocks Worth Considering as Retail Sales Rise in May
Inflation and recession fears seem to have taken a backseat for the time being, as U.S. retail sales again witnessed a positive trend in May. Consumer spending activity, one of the pivotal factors driving the economy, held up well last month, as Americans spent more on motor vehicles and building materials.
The Commerce Department reported a sequential increase of 0.3% in U.S. retail and food services sales for May, reaching a total of $686.6 billion. This follows a revised reading of a 0.4% increase registered in April. Impressively, May retail sales rose 1.6% from the year-ago period.
Currently, consumers are breathing a sigh of relief, owing to the decisive actions taken by the Federal Reserve to address inflationary headwinds. The Fed’s latest decision to temporarily pause the rate hike has bolstered the positive sentiment in the market.
Adding to the already buoyant 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. Furthermore, average hourly earnings increased 0.3%, while the same rose 4.3% on an annual basis.
That said, we have highlighted four stocks, Urban Outfitters, Inc. (URBN - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and Fastenal Company (FAST - Free Report) , 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.
Before delving into the stocks, let's take a look at the sales figures across different categories.
Category-Wise Sales
The Commerce Department’s report suggests that sales at motor vehicle & parts dealers and furniture & home furnishings stores increased 1.4% and 0.4%, respectively, on a sequential basis. Sales at electronics & appliance stores rose 0.2%, while the same at building material & supplies dealers increased 2.2%. Again, sales at non-store retailers were up 0.3%.
Sales at food & beverage stores climbed 0.3%, while at food services & drinking places, it grew 0.4%. At sporting goods, hobby, musical instrument, & book stores, sales advanced 0.3%, while the same at general merchandise stores rose 0.4%.
Sales at clothing & clothing accessories outlets and health & personal care stores remained flat. The report also indicated a decline of 1% in sales at miscellaneous store retailers. Meanwhile, receipts at gasoline stations were down 2.6%.
Price Performance: Past One Year
Image Source: Zacks Investment Research
4 Prominent Picks
You may invest in Urban Outfitters. 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. 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 3.4% and 732%, respectively, from the year-ago period. ANF presently sports a Zacks Rank #1.
Tecnoglass 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 18.2% and 25%, 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, 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.