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The earnings season has been grabbing eyeballs, turning out to be the second consecutive quarter of earnings growth after five quarters of back-to-back declines. We are almost at the tail end of the reporting cycle with the curtains down on most sectors. However, the Retail-Wholesale sector is still in the limelight. Hence, investors are keeping an eye on the same, gearing up to replenish their portfolio at a time when the economy is undergoing a big transition from the Obama administration to Trump’s regime.

Although, the Retail-Wholesale sector has not been an outstanding performer, it still holds some promise, given the favorable economic indicators. Moreover, friendlier fiscal and regulatory policies from the current administration also bode well for the sector. However, we understand that the space is not fully immune to global uncertainties, which could limit growth. We note that in the past one year, the sector has registered an increase of 14.2% compared with the S&P 500 that advanced 21.6%.

Nevertheless, the recent rebound in oil prices, an encouraging employment picture, and a gradual improvement in the manufacturing sector and housing market signal that the economy is on a recovery mode. These factors are playing a crucial role in raising buyers’ confidence, and we expect this positive sentiment to translate into higher consumer spending, which accounts for over two-thirds of the U.S. economic activity. Consumer spending rose 0.5% in December after gaining 0.2% in November.

3 Prominent Picks

Amid such a backdrop, the retail sector presents itself as a lucrative investment hub. Here we have highlighted three Retail/Wholesale stocks that have earnings beat potential. Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can see the complete list of today’s Zacks #1 Rank stocks here.

An earnings beat boosts investors’ confidence in the stock, which is reflected in its rapid price appreciation. These stocks could therefore turn out to be great additions to your portfolio ahead of their earnings releases.

Best Buy Co., Inc. (BBY - Free Report) , which is slated to report its fourth-quarter fiscal 2017 results on Mar 1, is a solid bet. This retailer of technology products, services, and solutions posted an average positive earnings surprise of 25.7% over the trailing four quarters, and has a long-term earnings growth rate of 11.9%. The stock has a Zacks Rank #3 with an Earnings ESP of +1.81%. The Zacks Consensus Estimate for the quarter is pegged at $1.66. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We also suggest investing in Costco Wholesale Corporation (COST - Free Report) , which will release its second-quarter fiscal 2017 results on Mar 2. This operator of membership warehouses has a Zacks Rank #3 and an Earnings ESP of +0.74%. The Zacks Consensus Estimate for the quarter currently stands at $1.35. Also, the stock has a long-term earnings growth rate of 10.8%.

Investors can even count on Staples, Inc. , with a Zacks Rank #3 and an Earnings ESP of +4.00%. The Zacks Consensus Estimate for the quarter is pegged at 25 cents. This leading retailer of office products and services has posted in-line earnings in the preceding two quarters and has a long-term earnings growth rate of 2.3%. The company is expected to report its fourth-quarter fiscal 2016 results on Mar 3.

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