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These 4 Retail Stocks Have Outshone the S&P 500 in 2023
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In a notable turnaround from the challenges of 2022, the stock market experienced a robust resurgence in 2023, witnessing impressive gains of more than 20% for the S&P 500.
The remarkable rally can be attributed to a trifecta of factors — a resilient economy, moderating inflation and growing optimism surrounding a potential peak in interest rates. These elements played a pivotal role in dispelling concerns of an impending recession and enticing investors back into the equities market. Additionally, the recent prospects of interest-rate cuts in 2024 have further fueled the market's momentum.
As investors navigated the twists and turns of this market resurgence, attention turned toward sectors that not only weathered the storms but outshone the benchmark S&P 500. Among these, the retail sector has showcased strength, adaptability and innovation in the face of economic fluctuations. The sector, which occupies the top 50% position in the list of Zacks sectors (eight out of 16), has ascended roughly 24.7% in the past year.
The Retail Industry's Triumph
The retail industry's impressive performance underscores its ability to adapt and thrive in the dynamic market conditions of 2023. Consumer confidence has been a driving force behind the sector's success.
A robust job market has been a key factor in bolstering consumer confidence and spending power. November saw the addition of an impressive 199,000 jobs to the U.S. economy, contributing to a low unemployment rate of 3.7%. The concurrent uptick in wage growth further solidified the link between a strong job market and increased consumer spending. The easing of inflationary pressures has further empowered consumers.
Within this flourishing sector, quite a few individual retail stocks have emerged as standouts, surpassing the S&P 500 and redefining expectations. These stocks, buoyed by a combination of strategic vision, technological innovation and an acute understanding of consumer trends, have proven resilient.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Amazon.com, Inc. (AMZN - Free Report) is worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.
The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 11% and 276.1%, respectively, from the year-ago reported figure. AMZN, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 54.9%, on average. The sock has advanced 80.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch Co. (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 13.3% from the year-ago period. The stock, which sports a Zacks Rank #1, has surged 301.3% in the past year.
The Gap, Inc. (GPS - Free Report) demonstrates resilience and positive momentum in its financial performance. The company's strategic efforts, including significant cost savings, have strengthened its financial position. Market share gains in key brands like Old Navy and Gap highlight successful product strategies. With disciplined expense control, strong cash generation and a focus on brand revitalization, Gap stands out as a promising player.
This specialty apparel company delivered a trailing four-quarter earnings surprise of 137.9%, on average. The Zacks Consensus Estimate for Gap’s current financial-year earnings suggests growth of 387.5% from the year-ago period. Shares of this Zacks Rank #1 company have surged 72.3% in the past year.
Deckers Outdoor Corporation (DECK - Free Report) has been targeting profitable and underpenetrated markets, emphasizing product innovations, store expansion and the strengthening of e-commerce capabilities. The company’s focus on expanding brand assortments, bringing more innovative lines of products, targeting consumers digitally and optimizing omni-channel distribution positions it for continued success.
Impressively, the Zacks Consensus Estimate for Deckers’ current-fiscal sales and EPS calls for growth of 11.7% and 21.3%, respectively, from the year-ago reported figure. DECK has a trailing four-quarter earnings surprise of 26.3%, on average. We note that shares of this Zacks Rank #1 company have increased 94.7% in the past year.
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These 4 Retail Stocks Have Outshone the S&P 500 in 2023
In a notable turnaround from the challenges of 2022, the stock market experienced a robust resurgence in 2023, witnessing impressive gains of more than 20% for the S&P 500.
The remarkable rally can be attributed to a trifecta of factors — a resilient economy, moderating inflation and growing optimism surrounding a potential peak in interest rates. These elements played a pivotal role in dispelling concerns of an impending recession and enticing investors back into the equities market. Additionally, the recent prospects of interest-rate cuts in 2024 have further fueled the market's momentum.
As investors navigated the twists and turns of this market resurgence, attention turned toward sectors that not only weathered the storms but outshone the benchmark S&P 500. Among these, the retail sector has showcased strength, adaptability and innovation in the face of economic fluctuations. The sector, which occupies the top 50% position in the list of Zacks sectors (eight out of 16), has ascended roughly 24.7% in the past year.
The Retail Industry's Triumph
The retail industry's impressive performance underscores its ability to adapt and thrive in the dynamic market conditions of 2023. Consumer confidence has been a driving force behind the sector's success.
A robust job market has been a key factor in bolstering consumer confidence and spending power. November saw the addition of an impressive 199,000 jobs to the U.S. economy, contributing to a low unemployment rate of 3.7%. The concurrent uptick in wage growth further solidified the link between a strong job market and increased consumer spending. The easing of inflationary pressures has further empowered consumers.
Within this flourishing sector, quite a few individual retail stocks have emerged as standouts, surpassing the S&P 500 and redefining expectations. These stocks, buoyed by a combination of strategic vision, technological innovation and an acute understanding of consumer trends, have proven resilient.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Amazon.com, Inc. (AMZN - Free Report) is worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.
The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 11% and 276.1%, respectively, from the year-ago reported figure. AMZN, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 54.9%, on average. The sock has advanced 80.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch Co. (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 13.3% from the year-ago period. The stock, which sports a Zacks Rank #1, has surged 301.3% in the past year.
The Gap, Inc. (GPS - Free Report) demonstrates resilience and positive momentum in its financial performance. The company's strategic efforts, including significant cost savings, have strengthened its financial position. Market share gains in key brands like Old Navy and Gap highlight successful product strategies. With disciplined expense control, strong cash generation and a focus on brand revitalization, Gap stands out as a promising player.
This specialty apparel company delivered a trailing four-quarter earnings surprise of 137.9%, on average. The Zacks Consensus Estimate for Gap’s current financial-year earnings suggests growth of 387.5% from the year-ago period. Shares of this Zacks Rank #1 company have surged 72.3% in the past year.
Deckers Outdoor Corporation (DECK - Free Report) has been targeting profitable and underpenetrated markets, emphasizing product innovations, store expansion and the strengthening of e-commerce capabilities. The company’s focus on expanding brand assortments, bringing more innovative lines of products, targeting consumers digitally and optimizing omni-channel distribution positions it for continued success.
Impressively, the Zacks Consensus Estimate for Deckers’ current-fiscal sales and EPS calls for growth of 11.7% and 21.3%, respectively, from the year-ago reported figure. DECK has a trailing four-quarter earnings surprise of 26.3%, on average. We note that shares of this Zacks Rank #1 company have increased 94.7% in the past year.