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4 Retail Stocks to Buy as Consumer Spending Stays Strong
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September brought encouraging news with consumer spending held up firmly, signaling continued economic resilience. Lower gasoline prices, continued wage gains and supportive monetary policies from the Federal Reserve have given consumers more spending power. This boost in retail activity comes at a crucial time, as industry players gear up for the upcoming holiday shopping season.
As per the Commerce Department, retail sales in September reached $714.4 billion, up from $711.3 billion in August, reflecting a 0.4% monthly increase. This rise in spending coincides with preparations for the upcoming festive season, traditionally a high-traffic period for retailers. The year-over-year sales growth for September stood at 1.7%, slightly lower than August’s 2.2%, but still a solid indicator of consumer confidence.
With job stability holding steady, consumers are feeling more secure about their financial outlook. The Federal Reserve has actively shaped the economic landscape by implementing a 50-basis point cut to the benchmark borrowing rate. With inflation gradually easing toward the Fed’s 2% target, economic conditions look favorable for consumers. Retailers such as Abercrombie & Fitch Co. (ANF - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Chewy, Inc. (CHWY - Free Report) are well-positioned to capitalize on this momentum.
Breaking Down the Retail Sales Number
Building material, garden equipment & supplies dealers, along with health & personal care stores, saw month-on-month increases of 0.2% and 1.1%, respectively. Sales at sporting goods, hobbies, musical instruments & bookstores rose by 0.3%, while miscellaneous stores experienced a 4% increase. Non-store retailers, primarily online, reported a 0.4% rise.
Sales at food and beverage stores rose by 1% and at clothing & clothing accessories stores increased by 1.5%. General merchandise stores experienced a 0.5% jump in sales, while food services & drinking places saw a 1% increase.
On the contrary, furniture & home furnishing stores saw a 1.4% drop, while electronics & appliance stores experienced a 3.3% decline. Receipts at gasoline stations decreased by 1.6%. Sales at motor vehicle & parts dealers remained unchanged.
Past-Year Stock Price Performance of ANF, COST, CMG & CHWY
Image Source: Zacks Investment Research
4 Prominent Retail Stocks
Abercrombie & Fitch: Brand Visibility & Global Expansion
Abercrombie & Fitch stands out as a strong investment choice. The company excels in integrating digital and physical retail channels, offering a seamless shopping experience and driving higher customer satisfaction and loyalty. Strategic marketing initiatives, particularly targeted campaigns in key markets, have been effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA (Europe, the Middle East and Africa) and the APAC (Asia-Pacific), provides a solid foundation for global expansion.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids has a trailing four-quarter earnings surprise of 28%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 13% and 63.4% from the year-ago period. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Costco: Leveraging Membership Model for Success
Costco has been navigating the market’s ups and downs pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been this discount retailer’s primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 7.5% and 10.2%, respectively, from the year-ago period’s actuals. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 2%, on average.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Chipotle: Tech-Driven Kitchen Innovations
Chipotle's future growth is anchored in its strong brand positioning. The company’s focus on enhancing the customer experience through menu innovation and streamlined digital operations continues to attract a loyal customer base. Its emphasis on improving operational efficiency, including innovations in kitchen technology and better use of real estate, strengthens profitability and scalability. Chipotle's ability to balance quality with convenience, along with expanding its presence in international and suburban markets, sets a solid foundation for long-term expansion and success.
The Zacks Consensus Estimate for Chipotle’s current fiscal sales and EPS suggests growth of 14.9% and 21.1%, respectively, from the year-ago reported figure. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 9.9%, on average.
Image Source: Zacks Investment Research
Chewy: Autoship Growth & Veterinary Expansion
Chewy is a notable player in the online pet retail market. The company’s Autoship program, central to its revenue strategy, drives significant sales through its subscription-based model, focusing on essential consumables and healthcare products. Chewy’s premium product offerings and growth in Net Sales Per Active Customer reflect strong customer loyalty and repeat purchases. The expansion into veterinary services through new clinics enhances customer acquisition and retention. The growing Sponsored Ads business is on track to become a significant revenue stream.
The Zacks Consensus Estimate for Chewy’s current fiscal sales and EPS suggests growth of 6.3% and 65.2%, respectively, from the year-ago reported figure. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 50.9%, on average.
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4 Retail Stocks to Buy as Consumer Spending Stays Strong
September brought encouraging news with consumer spending held up firmly, signaling continued economic resilience. Lower gasoline prices, continued wage gains and supportive monetary policies from the Federal Reserve have given consumers more spending power. This boost in retail activity comes at a crucial time, as industry players gear up for the upcoming holiday shopping season.
As per the Commerce Department, retail sales in September reached $714.4 billion, up from $711.3 billion in August, reflecting a 0.4% monthly increase. This rise in spending coincides with preparations for the upcoming festive season, traditionally a high-traffic period for retailers. The year-over-year sales growth for September stood at 1.7%, slightly lower than August’s 2.2%, but still a solid indicator of consumer confidence.
With job stability holding steady, consumers are feeling more secure about their financial outlook. The Federal Reserve has actively shaped the economic landscape by implementing a 50-basis point cut to the benchmark borrowing rate. With inflation gradually easing toward the Fed’s 2% target, economic conditions look favorable for consumers. Retailers such as Abercrombie & Fitch Co. (ANF - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Chewy, Inc. (CHWY - Free Report) are well-positioned to capitalize on this momentum.
Breaking Down the Retail Sales Number
Building material, garden equipment & supplies dealers, along with health & personal care stores, saw month-on-month increases of 0.2% and 1.1%, respectively. Sales at sporting goods, hobbies, musical instruments & bookstores rose by 0.3%, while miscellaneous stores experienced a 4% increase. Non-store retailers, primarily online, reported a 0.4% rise.
Sales at food and beverage stores rose by 1% and at clothing & clothing accessories stores increased by 1.5%. General merchandise stores experienced a 0.5% jump in sales, while food services & drinking places saw a 1% increase.
On the contrary, furniture & home furnishing stores saw a 1.4% drop, while electronics & appliance stores experienced a 3.3% decline. Receipts at gasoline stations decreased by 1.6%. Sales at motor vehicle & parts dealers remained unchanged.
Past-Year Stock Price Performance of ANF, COST, CMG & CHWY
Image Source: Zacks Investment Research
4 Prominent Retail Stocks
Abercrombie & Fitch: Brand Visibility & Global Expansion
Abercrombie & Fitch stands out as a strong investment choice. The company excels in integrating digital and physical retail channels, offering a seamless shopping experience and driving higher customer satisfaction and loyalty. Strategic marketing initiatives, particularly targeted campaigns in key markets, have been effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA (Europe, the Middle East and Africa) and the APAC (Asia-Pacific), provides a solid foundation for global expansion.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids has a trailing four-quarter earnings surprise of 28%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 13% and 63.4% from the year-ago period. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Costco: Leveraging Membership Model for Success
Costco has been navigating the market’s ups and downs pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been this discount retailer’s primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 7.5% and 10.2%, respectively, from the year-ago period’s actuals. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 2%, on average.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Chipotle: Tech-Driven Kitchen Innovations
Chipotle's future growth is anchored in its strong brand positioning. The company’s focus on enhancing the customer experience through menu innovation and streamlined digital operations continues to attract a loyal customer base. Its emphasis on improving operational efficiency, including innovations in kitchen technology and better use of real estate, strengthens profitability and scalability. Chipotle's ability to balance quality with convenience, along with expanding its presence in international and suburban markets, sets a solid foundation for long-term expansion and success.
The Zacks Consensus Estimate for Chipotle’s current fiscal sales and EPS suggests growth of 14.9% and 21.1%, respectively, from the year-ago reported figure. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 9.9%, on average.
Image Source: Zacks Investment Research
Chewy: Autoship Growth & Veterinary Expansion
Chewy is a notable player in the online pet retail market. The company’s Autoship program, central to its revenue strategy, drives significant sales through its subscription-based model, focusing on essential consumables and healthcare products. Chewy’s premium product offerings and growth in Net Sales Per Active Customer reflect strong customer loyalty and repeat purchases. The expansion into veterinary services through new clinics enhances customer acquisition and retention. The growing Sponsored Ads business is on track to become a significant revenue stream.
The Zacks Consensus Estimate for Chewy’s current fiscal sales and EPS suggests growth of 6.3% and 65.2%, respectively, from the year-ago reported figure. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 50.9%, on average.
Image Source: Zacks Investment Research