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Shopping Mall Resurgence: 3 Retails Stocks to Buy Now

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After years of evolving trends and shoppers moving online, the once-iconic American shopping mall no longer seemed relevant. Nevertheless, the success of some retail stocks this earnings season shows us that mall-based retailers are making a comeback.

Global economic uncertainty caused a sluggish start to year throughout many industries, and retail was one of the hardest hit sectors in the first half of 2016, but shoppers do appear willing to spend money right now—as long as it’s in the right place.

The companies that have seen success lately have been those that have improved the customer experience, both in-store and online. Freshly polished stores have mall shoppers feeling “cool” again, while investments in e-commerce have created an easier online shopping experience (also read: Here's How Shopping Trends Have Helped Retail Stocks Lately).

The second-quarter earnings season proved that retailers can flourish in the current market conditions. Several of these retailers stood out from the pack and continue to be solid options for investors looking to cash in on the mall-based retailer resurgence. Check them out below:

1.       American Eagle (AEO - Free Report)

American Eagle posted earnings of 23 cents per share on revenues of $823 million, beating the Zacks Consensus Estimates of 21 cents per share and $819 million, respectively. The company also saw comparable-store sales growth of 3%, marking its sixth consecutive quarter of comps growth.

American Eagle’s strong earnings results initiated a wave of positive estimate adjustments from analysts, lifting the company to a Zacks Rank #2 (Buy). On top of its strong Zacks Rank, American Eagle also has a VGM score of “A” and looks to see earnings growth of over 20% this year.

 

2.       Foot Locker (FL - Free Report)

Foot Locker also impressed with its most recent report. The company posted earnings of 94 cents per share, beating the Zacks Consensus Estimate of 91 cents per share. Foot Locker also reported revenues of $1.780 billion versus our consensus estimate of $1.764 billion. Notably, the specialty retailer of athletic shoes and apparel saw comps growth of 4.7% in the quarter.

Since its earnings announcement, Foot Locker has seen some negative revisions for its current-quarter earnings, but positive revisions for its next-quarter, full-year, and next-year earnings have earned the stock a Zacks Rank #2 (Strong Buy). The company also has a VGM score of “A.”

 

3.       Urban Outfitters (URBN - Free Report)

Urban Outfitters also recorded a double-beat, with its earnings of 66 cents per share coming in well above the Zacks Consensus Estimate of 56 cents per share and revenues of $891 million beating our consensus estimate of $889 million. The company saw comps growth of 1%, led by 5% comps growth at its Urban Outfitters-branded stores.

Since the release of its report, Urban Outfitters has seen 10 positive revisions for its current-quarter earnings, nine positive revisions for its next-quarter earnings, and 14 positive revisions for its next-year earnings. As a result, the company holds a Zacks Rank #1 (Strong Buy) and its recent performance has earned it a VGM score of “A.”

 

Bottom Line

The American shopping malls in certainly not what it used to be, but that doesn’t mean that mall-based retailers are dead in the water. While some companies like Abercrombie & Fitch (ANF - Free Report) continue to struggle, others have been able to ride recent shopping trends and create inviting experiences for customers. For more coverage on the state of the shopping mall, check out: Abercrombie An Outlier Among Strong Shopping Mall Stocks!

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