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Don't Lose Confidence, Scoop Up These 4 Retail Stocks Instead
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February saw a setback in U.S. consumer confidence, reversing three consecutive months of gains. The Conference Board's consumer confidence index slipped to 106.7 from January's revised reading of 110.9, mirroring concerns over the labor market and domestic political tussle.
Despite recent indicators painting a picture of a robust U.S. economy, consumers are increasingly wary of a potential recession. This shift in sentiment highlights the delicate balance between economic strength and lingering uncertainties.
The unexpected drop in consumer confidence comes against a backdrop of challenges, including high interest rates and inflation. While inflation has eased slightly, it remains above the Federal Reserve's target, adding to consumer anxieties.
With consumer spending driving roughly 70% of economic activity in the United States, shifts in sentiment carry significant weight in assessing the broader economic landscape. The present situation index, based on consumers' assessment of current business and labor market conditions, fell to 147.2 in February from 154.9 in January.
While worries about food and gas prices eased slightly, concerns over job security and the ongoing presidential campaign intensified. Additionally, the Federal Reserve maintaining high interest rates for the time being exacerbates economic pressures.
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
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 11.5% and 40%, respectively, from the year-ago reported figure. AMZN, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 51%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor Corporation (DECK - Free Report) is also a promising choice. The company 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 omnichannel distribution positions it for continued success.
Impressively, the Zacks Consensus Estimate for Deckers’ current-fiscal sales and EPS calls for growth of 15.7% and 38.6%, respectively, from the year-ago reported figure. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 32.1%, on average.
Costco Wholesale Corporation (COST - Free Report) is another potential pick. The company has redefined the industry with its unique model of bulk buying and membership-based retailing. The discount retailer’s growth strategies, better price management and decent membership trends have been contributing to its performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering decent sales numbers. We believe a favorable product mix, steady store traffic, pricing strength and strong liquidity should benefit Costco.
Costco has a trailing four-quarter earnings surprise of 2.6%, on average. The Zacks Consensus Estimate for current fiscal year revenues implies 4.7% growth, while the same for earnings per share indicates a 6.5% increase from the corresponding year-ago reported figures. The stock currently carries a Zacks Rank #2 (Buy).
Investors can count on Target Corporation (TGT - Free Report) . 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 38.9% from the year-ago reported figure. TGT, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 30.8%, on average.
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Don't Lose Confidence, Scoop Up These 4 Retail Stocks Instead
February saw a setback in U.S. consumer confidence, reversing three consecutive months of gains. The Conference Board's consumer confidence index slipped to 106.7 from January's revised reading of 110.9, mirroring concerns over the labor market and domestic political tussle.
Despite recent indicators painting a picture of a robust U.S. economy, consumers are increasingly wary of a potential recession. This shift in sentiment highlights the delicate balance between economic strength and lingering uncertainties.
The unexpected drop in consumer confidence comes against a backdrop of challenges, including high interest rates and inflation. While inflation has eased slightly, it remains above the Federal Reserve's target, adding to consumer anxieties.
With consumer spending driving roughly 70% of economic activity in the United States, shifts in sentiment carry significant weight in assessing the broader economic landscape. The present situation index, based on consumers' assessment of current business and labor market conditions, fell to 147.2 in February from 154.9 in January.
While worries about food and gas prices eased slightly, concerns over job security and the ongoing presidential campaign intensified. Additionally, the Federal Reserve maintaining high interest rates for the time being exacerbates economic pressures.
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
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 11.5% and 40%, respectively, from the year-ago reported figure. AMZN, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 51%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor Corporation (DECK - Free Report) is also a promising choice. The company 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 omnichannel distribution positions it for continued success.
Impressively, the Zacks Consensus Estimate for Deckers’ current-fiscal sales and EPS calls for growth of 15.7% and 38.6%, respectively, from the year-ago reported figure. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 32.1%, on average.
Costco Wholesale Corporation (COST - Free Report) is another potential pick. The company has redefined the industry with its unique model of bulk buying and membership-based retailing. The discount retailer’s growth strategies, better price management and decent membership trends have been contributing to its performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering decent sales numbers. We believe a favorable product mix, steady store traffic, pricing strength and strong liquidity should benefit Costco.
Costco has a trailing four-quarter earnings surprise of 2.6%, on average. The Zacks Consensus Estimate for current fiscal year revenues implies 4.7% growth, while the same for earnings per share indicates a 6.5% increase from the corresponding year-ago reported figures. The stock currently carries a Zacks Rank #2 (Buy).
Investors can count on Target Corporation (TGT - Free Report) . 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 38.9% from the year-ago reported figure. TGT, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 30.8%, on average.