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5 Stocks to Gain From Healthy End-of-Year Retail Sales
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Retail sales picked up in the United States in December, signaling a solid end to the year and underlining the resilience of American shoppers. Consumer spending picked up at a much stronger pace as employers continued to hire, while wages improved.
This calls for investing in retailers such as American Eagle Outfitters (AEO - Free Report) , Abercrombie & Fitch (ANF - Free Report) , Stitch Fix (SFIX - Free Report) , Carrols Restaurant Group (TAST - Free Report) and Darden Restaurants (DRI - Free Report) , which are positioned to gain even more.
Retail Sales Increase in December, Topping Expectations
According to the Commerce Department, sales at U.S. retailers increased 0.6% in December, more than analysts’ expectations of an increase of 0.4%. An uptick in retail sales in November and December indicated a robust holiday shopping season. November’s retail sales rose 0.3%.
Barring autos, retail sales advanced 0.4%, exceeding the 0.2% estimate. Retail sales, by the way, increased an impressive 5.6% year over year in December, way more than inflation. The consumer price index went up 3.4% in December from a year ago.
Retail sales have been broad-based, with sales at clothing stores and online retailers witnessing an increase of 1.5% in December. Receipts at departmental stores increased by 3% last month, while outlays in car dealerships also improved. Sales rose 1.1% at auto dealers. Above all, sales at food services and drinking places saw an increase of 11.1% from December 2022, although it was flat month over month.
So, what drove retail sales northward? American shoppers spent more at retail outlets banking on the strength of the labor market. Employers added 216,000 new jobs in December, which easily topped expectations. At the same time, the unemployment rate stands at 3.7%, way lower than the long-term average of 5.7%, indicating that jobs are being added to the U.S. economy at a steady clip. Notably, an increase in average hourly wages gave shoppers the wherewithal to spend (read more: 3 Staffing Stocks You'll Regret Not Buying Soon in 2024).
But it’s not just in December; retail sales are expected to improve this year as well. The Federal Reserve’s less hawkish stance, coupled with online and offline deals, should certainly entice consumers to open their wallets and spend more on nonobligatory goods and services.
5 Big Winners
It’s practical for shrewd investors to place their bets on retailers that directly benefit from this encouraging economic backdrop and a significant uptick in retail sales.
We have thus selected five stocks that carry 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 is a specialty retailer of casual apparel, accessories and footwear. AEO currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 4.5% over the past 60 days. The company’s expected earnings growth for the current year is 43.3%.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. ANF currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 35.4% over the past 60 days. The company’s expected earnings growth for the current year is 2,320%.
Stitch Fix is a leading online personal styling service. SFIX currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased almost 9% over the past 60 days. The company’s expected earnings growth for the current year is 29.6%.
Carrols Restaurant is the largest BURGER KING franchisee in the United States. TAST currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 16.7% over the past 60 days. The company’s expected earnings growth for the current year is 170%.
Darden Restaurants is one of the largest casual dining restaurant operators worldwide. DRI currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 1.1% over the past 60 days. The company’s expected earnings growth for the current year is 10.9%.
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5 Stocks to Gain From Healthy End-of-Year Retail Sales
Retail sales picked up in the United States in December, signaling a solid end to the year and underlining the resilience of American shoppers. Consumer spending picked up at a much stronger pace as employers continued to hire, while wages improved.
This calls for investing in retailers such as American Eagle Outfitters (AEO - Free Report) , Abercrombie & Fitch (ANF - Free Report) , Stitch Fix (SFIX - Free Report) , Carrols Restaurant Group (TAST - Free Report) and Darden Restaurants (DRI - Free Report) , which are positioned to gain even more.
Retail Sales Increase in December, Topping Expectations
According to the Commerce Department, sales at U.S. retailers increased 0.6% in December, more than analysts’ expectations of an increase of 0.4%. An uptick in retail sales in November and December indicated a robust holiday shopping season. November’s retail sales rose 0.3%.
Barring autos, retail sales advanced 0.4%, exceeding the 0.2% estimate. Retail sales, by the way, increased an impressive 5.6% year over year in December, way more than inflation. The consumer price index went up 3.4% in December from a year ago.
Retail sales have been broad-based, with sales at clothing stores and online retailers witnessing an increase of 1.5% in December. Receipts at departmental stores increased by 3% last month, while outlays in car dealerships also improved. Sales rose 1.1% at auto dealers. Above all, sales at food services and drinking places saw an increase of 11.1% from December 2022, although it was flat month over month.
So, what drove retail sales northward? American shoppers spent more at retail outlets banking on the strength of the labor market. Employers added 216,000 new jobs in December, which easily topped expectations. At the same time, the unemployment rate stands at 3.7%, way lower than the long-term average of 5.7%, indicating that jobs are being added to the U.S. economy at a steady clip. Notably, an increase in average hourly wages gave shoppers the wherewithal to spend (read more: 3 Staffing Stocks You'll Regret Not Buying Soon in 2024).
But it’s not just in December; retail sales are expected to improve this year as well. The Federal Reserve’s less hawkish stance, coupled with online and offline deals, should certainly entice consumers to open their wallets and spend more on nonobligatory goods and services.
5 Big Winners
It’s practical for shrewd investors to place their bets on retailers that directly benefit from this encouraging economic backdrop and a significant uptick in retail sales.
We have thus selected five stocks that carry 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 is a specialty retailer of casual apparel, accessories and footwear. AEO currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 4.5% over the past 60 days. The company’s expected earnings growth for the current year is 43.3%.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. ANF currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 35.4% over the past 60 days. The company’s expected earnings growth for the current year is 2,320%.
Stitch Fix is a leading online personal styling service. SFIX currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased almost 9% over the past 60 days. The company’s expected earnings growth for the current year is 29.6%.
Carrols Restaurant is the largest BURGER KING franchisee in the United States. TAST currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 16.7% over the past 60 days. The company’s expected earnings growth for the current year is 170%.
Darden Restaurants is one of the largest casual dining restaurant operators worldwide. DRI currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 1.1% over the past 60 days. The company’s expected earnings growth for the current year is 10.9%.