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4 Solid Stocks to Add to Your Portfolio on Soaring Retail Sales
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The U.S. retail sector is making a dramatic turnaround as inflation shows signs of easing and higher consumer demand continues to drive sales. This definitely is a good sign ahead of the all-important holiday season that is expected to boost sales.
Given this situation, investing in retail stocks like American Eagle Outfitters, Inc. (AEO - Free Report) , Walmart, Inc. (WMT - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) is an ideal option.
Retail Sales Soar
The Commerce Department reported on Oct 17 that retail sales totaled $704.9 billion in September, jumping a solid 0.7% month over month. This was way above the consensus estimate of a rise of 0.3%.
Also, August retail sales were revised from an increase of 0.6% to 0.8%. On a year-over-year basis, retail sales rose 3.8% in September. Sales were primarily driven by a rise in oil prices that led to a 0.9% rise in receipts at gas stations.
Excluding autos, retail sales rose 0.6% in September. Core retail sales, which strips out sales at auto dealers, mobile homes, tobacco stores and gas stations, rose 0.6%.
Core retail sales are an important metric for the government in calculating the nation’s GDP.
Online sales increased 1% in September after growing 0.45 in August. Sales at restaurants were up 9.2% year over year in September.
The Fed has increased interest rates by 525 basis points since March 2022 to take its benchmark policy rate to the range of 5.25-5.5%. This has seen inflation declining sharply over the past few months after peaking at 9.1% in June 2022.
The Federal Reserve, however, is planning to go for another 25-basis point interest rate hike by the end of this year before going for two rate cuts in 2024. Moreover, higher rates are expected to stay longer than earlier expected.
The retail sales figure plays a key role in the Fed’s rate hike decision. However, the retail sector seems to be making a solid turnaround amid the ongoing pressures and challenges.
The September retail sales figure also indicates that economic growth accelerated in the third quarter. Consumer spending, too, has been higher thanks to a tight labor market that saw 336,000 jobs created in September.
Also, GDP estimates for the third quarter are as high as 5.1%. U.S. GDP grew 2.1% in the second quarter despite high interest rates. Moreover, the holiday season is approaching, which is expected to further drive retail sales.
Our Picks
Given the encouraging economic environment and increase in retail sales, it would be prudent for savvy investors to consider betting on retail stocks that stand to benefit directly from these favorable conditions.
Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also have a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Eagle Outfitters, Inc. is a specialty retailer of casual apparel, accessories and footwear for men and women aged 15-25 years. AEO, along with its subsidiaries, engages in the designing and marketing of casual clothing. American Eagle Outfitters’ assortment includes jeans, cargo pants, graphic T-shirts as well as a range of accessories, outerwear and footwear.
American Eagle Outfitters’ expected earnings growth rate for the current year is 33%. The Zacks Consensus Estimate for current-year earnings has improved 22.9% over the past 60 days. AEO presently sports a Zacks Rank #1 and a VGM Score of A.
Walmart has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. WMT’s product offerings include almost everything from grocery to cosmetics, electronics to stationery, home furnishings to health and wellness products, and apparel to entertainment products, to name a few.
Walmart’s expected earnings growth rate for the current year is 2.2%. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 60 days. WMT presently carries a Zacks Rank #2 and a VGM Score of A.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home decor and gift products. URBN merchandise is generally sold directly to consumers through stores, catalogs, call centers and e-commerce platforms. Urban Outfitters has operations in the United States, Canada and Europe.
Urban Outfitters’ expected earnings growth rate for the current year is 83.4%. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days. URBN currently sports a Zacks Rank #1 and a VGM Score of B.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. ANF's product portfolio includes knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids, under the Abercrombie & Fitch, abercrombie kids and Hollister brands.
Abercrombie & Fitch’s expected earnings growth rate for the current year is 1,644%. The Zacks Consensus Estimate for current-year earnings has improved 108.6% over the past 60 days. ANF currently sports a Zacks Rank #1 and has a VGM Score of A.
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4 Solid Stocks to Add to Your Portfolio on Soaring Retail Sales
The U.S. retail sector is making a dramatic turnaround as inflation shows signs of easing and higher consumer demand continues to drive sales. This definitely is a good sign ahead of the all-important holiday season that is expected to boost sales.
Given this situation, investing in retail stocks like American Eagle Outfitters, Inc. (AEO - Free Report) , Walmart, Inc. (WMT - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) is an ideal option.
Retail Sales Soar
The Commerce Department reported on Oct 17 that retail sales totaled $704.9 billion in September, jumping a solid 0.7% month over month. This was way above the consensus estimate of a rise of 0.3%.
Also, August retail sales were revised from an increase of 0.6% to 0.8%. On a year-over-year basis, retail sales rose 3.8% in September. Sales were primarily driven by a rise in oil prices that led to a 0.9% rise in receipts at gas stations.
Excluding autos, retail sales rose 0.6% in September. Core retail sales, which strips out sales at auto dealers, mobile homes, tobacco stores and gas stations, rose 0.6%.
Core retail sales are an important metric for the government in calculating the nation’s GDP.
Online sales increased 1% in September after growing 0.45 in August. Sales at restaurants were up 9.2% year over year in September.
The Fed has increased interest rates by 525 basis points since March 2022 to take its benchmark policy rate to the range of 5.25-5.5%. This has seen inflation declining sharply over the past few months after peaking at 9.1% in June 2022.
The Federal Reserve, however, is planning to go for another 25-basis point interest rate hike by the end of this year before going for two rate cuts in 2024. Moreover, higher rates are expected to stay longer than earlier expected.
The retail sales figure plays a key role in the Fed’s rate hike decision. However, the retail sector seems to be making a solid turnaround amid the ongoing pressures and challenges.
The September retail sales figure also indicates that economic growth accelerated in the third quarter. Consumer spending, too, has been higher thanks to a tight labor market that saw 336,000 jobs created in September.
Also, GDP estimates for the third quarter are as high as 5.1%. U.S. GDP grew 2.1% in the second quarter despite high interest rates. Moreover, the holiday season is approaching, which is expected to further drive retail sales.
Our Picks
Given the encouraging economic environment and increase in retail sales, it would be prudent for savvy investors to consider betting on retail stocks that stand to benefit directly from these favorable conditions.
Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also have a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Eagle Outfitters, Inc. is a specialty retailer of casual apparel, accessories and footwear for men and women aged 15-25 years. AEO, along with its subsidiaries, engages in the designing and marketing of casual clothing. American Eagle Outfitters’ assortment includes jeans, cargo pants, graphic T-shirts as well as a range of accessories, outerwear and footwear.
American Eagle Outfitters’ expected earnings growth rate for the current year is 33%. The Zacks Consensus Estimate for current-year earnings has improved 22.9% over the past 60 days. AEO presently sports a Zacks Rank #1 and a VGM Score of A.
Walmart has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. WMT’s product offerings include almost everything from grocery to cosmetics, electronics to stationery, home furnishings to health and wellness products, and apparel to entertainment products, to name a few.
Walmart’s expected earnings growth rate for the current year is 2.2%. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 60 days. WMT presently carries a Zacks Rank #2 and a VGM Score of A.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home decor and gift products. URBN merchandise is generally sold directly to consumers through stores, catalogs, call centers and e-commerce platforms. Urban Outfitters has operations in the United States, Canada and Europe.
Urban Outfitters’ expected earnings growth rate for the current year is 83.4%. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days. URBN currently sports a Zacks Rank #1 and a VGM Score of B.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. ANF's product portfolio includes knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids, under the Abercrombie & Fitch, abercrombie kids and Hollister brands.
Abercrombie & Fitch’s expected earnings growth rate for the current year is 1,644%. The Zacks Consensus Estimate for current-year earnings has improved 108.6% over the past 60 days. ANF currently sports a Zacks Rank #1 and has a VGM Score of A.