As the holiday season unfolds, U.S. consumer confidence has shown a promising uptick in November, breaking a three-month decline. The latest data from The Conference Board reveals a shift in sentiment, with Americans expressing optimism about big-ticket purchases. However, underlying concerns about inflation, geopolitical tensions and rising interest rates persist.
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Against a backdrop of economic uncertainties, U.S. consumer confidence has staged a comeback in November. The latest report from The Conference Board unveils that the consumer confidence index rose to 102 in November from October's downwardly revised reading of 99.1.
This resurgence is underscored by an optimistic outlook on employment prospects, coupled with a welcome moderation in inflation. The easing inflationary pressures provide relief, enabling real wages to inch higher and empowering Americans to sustain their spending habits. Consumer confidence serves as a vital barometer for the health of the U.S. economy, given that consumer spending constitutes approximately 70% of the economic activity. The rebound in confidence is especially noteworthy as it coincides with the onset of the crucial holiday shopping season, a period that traditionally sets the tone for retail performance. Well, the 2023 holiday season commenced with a resounding cheer as a whopping 200.4 million shoppers swarmed both physical stores and online platforms from Thanksgiving through Cyber Monday. This record-breaking feat, unveiled in a survey conducted by the National Retail Federation (“NRF”), not only outshone last year's remarkable figure of 196.7 million but also surpassed the NRF's optimistic projection of 182 million shoppers. With the economic backdrop in favor, now is an opportune time for investors to explore retail stocks. That said, we have highlighted four stocks from the sector that look well-positioned based on their sound fundamentals. Past-Year Price Performance Image Source: Zacks Investment Research 4 Prominent Picks
Investors can count on
Brinker International ( EAT Quick Quote EAT - Free Report) , one of the world's leading casual dining restaurant companies. Brinker International is unwavering in its commitment to enhancing customer engagement and boosting revenues through various sales-boosting strategies. These include optimizing the menu and fostering innovation, reinforcing its value proposition, improving food presentation, implementing effective advertising campaigns, optimizing kitchen systems and introducing an enhanced service platform. The Zacks Consensus Estimate for Brinker International's current financial-year sales and earnings suggests growth of 5.1% and 26.2%, respectively, from the year-ago reported figure. EAT, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 233.6%, on average. You can see . the complete list of today’s Zacks #1 Rank stocks here Abercrombie & Fitch ( ANF Quick Quote ANF - Free Report) is another potential pick. The company's ability to adapt, innovate and connect with customers positions it for a prosperous future. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA and the APAC, provides a solid foundation for global expansion. Its strong brand portfolio, operational efficiency and regional strategy make it an attractive investment opportunity as it continues to navigate and thrive in the evolving retail landscape. This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 713%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 12.3% from the year-ago period. The stock sports a Zacks Rank #1. Target Corporation ( TGT Quick Quote TGT - Free Report) is also worth considering. This Minneapolis, MN-based company has been making multiple changes to its business model to adapt and stay relevant in the dynamic retail landscape. Target has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers with a seamless shopping experience. These have been contributing to the top line. The Zacks Consensus Estimate for Target’s current financial-year EPS suggests growth of 38.5% from the year-ago reported figure. TGT, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 30.8%, on average. American Eagle Outfitters ( AEO Quick Quote AEO - Free Report) is worth betting on. The company’s efforts to rationalize inventory and contain costs are paying off. The strong performance of key brands like American Eagle and Aerie, coupled with expansions into premium and activewear segments, indicates potential for growth. The introduction of new store designs and online enhancements demonstrates a commitment to improving the customer experience. The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal sales and EPS suggests growth of 3.7% and 37.1%, respectively, from the year-ago reported figure. AEO, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 23%, on average.