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5 Reasons Why Fred's (FRED) Should be in Your Portfolio
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Investors are looking for safe haven assets in a volatile economic scenario. The recent reversal in oil prices, global growth issues and uncertainty about the timing of a Fed rate hike are weighing on investors’ sentiment.
However, retail stocks seem to provide good returns to investors, courtesy rising comps aided by omni channel retailing.
Discount retailer Fred’sInc. might therefore be an intriguing investment choice for investors right now. This Memphis, TN-based has strong growth potential.
Why Fred’s Is a Good Choice
VGM Score: Fred’s carries a VGM score of A. Here “V” stands for Value, “G” for Growth and “M” for Momentum and the score is the weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select the ones that are likely to outperform. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
Fred fares well in the style score system too, with a Growth score of A.
Rank and Estimates: Fred’s, a Zacks Rank #2 (Buy) stock, has had a good run so far this year, gaining around 8.8%. Over the past 30 days, analysts have become increasingly bullish on the company, with 2 out of 4 estimate revisions moving north for fiscal 2017 earnings.
Quarterly Results and Outlook: Fred's’ first-quarter fiscal 2017 earnings of $0.03 beat the Zacks Consensus Estimate of $0.02 by 50.0%. The results improved substantially from the breakeven reported a year ago, mainly on the back of higher revenues. First-quarter sales increased 8% year over year to $549.54 million although it missed the consensus mark by 0.4%. Revenue increased year over year backed by higher traffic in its stores
Initiatives: Fred’s has been undertaking several initiatives to drive profits. The company undertook a new plan in fiscal 2015 to reposition its merchandise assortment and focus on convenience and consumables instead of discretionary categories where the brand has little competitive advantage. This is expected to boost the company’s top line in the coming quarters.
Pharmacy Business: Fred’s has a strong pharmacy department which has been gaining momentum recently and has been contributing significantly to revenues. The company puts great focus on the business, which has also gained momentum of late and is the main area of growth for the company.
Conclusion
Other stocks in the broader retail wholesale sector are Wal-Mart Stores Inc. (WMT - Free Report) , BJ's Restaurant (BJRI - Free Report) and Chuy’s Holdings Inc. (CHUY - Free Report) , all carrying a Zacks Rank #2 (Buy).
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5 Reasons Why Fred's (FRED) Should be in Your Portfolio
Investors are looking for safe haven assets in a volatile economic scenario. The recent reversal in oil prices, global growth issues and uncertainty about the timing of a Fed rate hike are weighing on investors’ sentiment.
However, retail stocks seem to provide good returns to investors, courtesy rising comps aided by omni channel retailing.
Discount retailer Fred’s Inc. might therefore be an intriguing investment choice for investors right now. This Memphis, TN-based has strong growth potential.
Why Fred’s Is a Good Choice
VGM Score: Fred’s carries a VGM score of A. Here “V” stands for Value, “G” for Growth and “M” for Momentum and the score is the weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select the ones that are likely to outperform. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
Fred fares well in the style score system too, with a Growth score of A.
Rank and Estimates: Fred’s, a Zacks Rank #2 (Buy) stock, has had a good run so far this year, gaining around 8.8%. Over the past 30 days, analysts have become increasingly bullish on the company, with 2 out of 4 estimate revisions moving north for fiscal 2017 earnings.
Quarterly Results and Outlook: Fred's’ first-quarter fiscal 2017 earnings of $0.03 beat the Zacks Consensus Estimate of $0.02 by 50.0%. The results improved substantially from the breakeven reported a year ago, mainly on the back of higher revenues. First-quarter sales increased 8% year over year to $549.54 million although it missed the consensus mark by 0.4%. Revenue increased year over year backed by higher traffic in its stores
Initiatives: Fred’s has been undertaking several initiatives to drive profits. The company undertook a new plan in fiscal 2015 to reposition its merchandise assortment and focus on convenience and consumables instead of discretionary categories where the brand has little competitive advantage. This is expected to boost the company’s top line in the coming quarters.
Pharmacy Business: Fred’s has a strong pharmacy department which has been gaining momentum recently and has been contributing significantly to revenues. The company puts great focus on the business, which has also gained momentum of late and is the main area of growth for the company.
Conclusion
Other stocks in the broader retail wholesale sector are Wal-Mart Stores Inc. (WMT - Free Report) , BJ's Restaurant (BJRI - Free Report) and Chuy’s Holdings Inc. (CHUY - Free Report) , all carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>