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4 Retail Stocks to Consider for Your Holiday Shopping List

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Retailers have begun prepping for the holiday season with as much zeal as shoppers are looking forward to eye-popping deals. Players in the industry are all geared up to walk the extra mile this festive season to capitalize on any potential upswing in demand. Healthy employment and wage gains should support consumer spending, which has so far been resilient despite a tough economic environment.

According to Mastercard SpendingPulse, U.S. retail sales, excluding automotive, are anticipated to increase 3.7% from a year earlier during the traditional holiday period spanning from Nov 1 to Dec 24. While in-store retail sales are projected to increase 2.9%, e-commerce sales are expected to rise 6.7%. With a proactive approach and customer-centric offerings, retailers will try to seize every opportunity the season presents.

The significance of the holiday season for retailers cannot be overstated. This period marks a crucial juncture, often accounting for a substantial portion of annual sales. The influx of enthusiastic shoppers provides retailers with the opportunity to showcase their offerings, boost revenues and solidify brand loyalty. Retailers leverage this period to not only maximize sales but also leave an indelible impression on consumers.

Retailers are poised to leverage their strengths and strategically invest in delivering fast, convenient and secure shopping experiences, whether in physical stores or online. They are diligently restocking shelves with high-demand products, enhancing their online presence to boost product visibility, engaging customers effectively through social channels and optimizing logistics to ensure seamless operations.

That said, we have highlighted four stocks from the Retail - Wholesale sector that look well-positioned based on their sound fundamentals.

Past-Year Price Performance

Zacks Investment Research
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4 Prominent Picks

Urban Outfitters (URBN - Free Report) is worth betting on. This leading lifestyle product 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 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 9% and 84.6%, respectively, from the year-ago reported figure. URBN has a trailing four-quarter earnings surprise of 19.2%, on average. This Zacks Rank #1 (Strong Buy) company has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Walmart (WMT - Free Report) is another potential pick. The omnichannel retail giant has been diligently working to further strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment.

This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 11.6%, on average. The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 9.2% and 2.2%, respectively, from the year-ago reported numbers. The company has a VGM Score of A.

Investors can count on Ross Stores (ROST - Free Report) . The store expansion strategy, combined with the company's strong brand reputation and off-price retail model, positions Ross Stores for success in the dynamic retail landscape. The company has ambitious goals, aiming to reach at least 2,900 Ross Dress for Less and 700 dd's DISCOUNTS locations over time. By expanding its store network, the company strengthens brand visibility, captures new customer segments and unlocks potential sales growth.

This operator of off-price retail apparel and home fashion stores delivered a trailing four-quarter earnings surprise of 11.4%, on average. The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and EPS suggests growth of 8.1% and 19.4%, respectively, from the year-ago period. ROST, which presently carries a Zacks Rank #2, has a VGM Score of B.

Sprouts Farmers Market (SFM - Free Report) is also worth considering. The company has crafted a reputation for itself within the grocery industry by consistently prioritizing key areas that resonate with consumers. The company’s focus on product innovation, emphasis on e-commerce, the expansion of private-label offerings and targeted marketing with everyday great pricing bode well. It has been lowering operational complexity, optimizing production, improving the in-stock position and updating to smaller-format stores.

The Zacks Consensus Estimate for Sprouts Farmers’ current fiscal sales and EPS suggests growth of 5.7% and 15.1%, respectively, from the year-ago reported figure. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 14.3%, on average, with a VGM Score of A.

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