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5 of the Best Retail Stocks to Buy Ahead of Q3 Earnings
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It has been quite challenging for retailers over the past several years, with many facing store closures. Growth in e-commerce significantly changed the way consumers shop, while natural calamities like hurricanes impacted many retailers more recently.
Even though retailers mostly flopped this year, things are starting to turn around. Many retailers are poised to open new stores as September sales rose at the highest rate since 2015. And with the holiday shopping season around the corner, sales are expected to improve.
Meanwhile, consumer confidence crushed expectations and scaled to its highest level in October since 2004. As American consumers are gaining confidence in the economy, things are looking up for retailers. Thus, let us keep an eye on retail stocks that are likely to make the most of the third-quarter earnings season.
Is the Retail Death Overhyped?
Investors have been concerned about a sizeable number of bankruptcies and store closures in the retail space over the last several years. Sporting goods, clothing, and electronics retailers, in particular, closed stores to curtail expenses and subsequently drive profits. There has also been a significant decline in comparable-store sales, mostly due to a rise in online deals.
However, of late, companies closing stores are often referred to as attention-seeking, as a large number of stores are actually being opened. As per IHL Group, the total net increase of stores planned for 2017, including retail and restaurants, is 4,080. Core retail stores, which excludes restaurants, are anticipated to see a net gain of 1,326 this year.
The store openings are mainly driven by a broad-based gain in retail sales last month, including those that have been the hardest hit by bankruptcies and store closures over the past year. Overall U.S. retail sales climbed 1.6% in September from August, marking the highest increase since March 2015. Retail sales received a sizeable boost from automobiles, gasoline stations, and building materials. Excluding such categories and foodservices, retail sales were up 0.4%.
Holidays Right Around the Corner
Retail sales are expected to gain further traction this year thanks to the upcoming holiday shopping season. Both Black Friday and Cyber Monday, historically, have seen retail sales move north. According to Adobe Digital Insights, consumers had spent a solid $3.34 billion on Black Friday and $3.45 billion on Cyber Monday.
Respondents surveyed said that Wal-Mart Stores Inc (WMT - Free Report) is the most sought-after destination for the upcoming Black Friday weekend, while Amazon.com, Inc. (AMZN - Free Report) is the top destination for the Cyber Monday holiday.
In fact, this year, holiday retail sales for the upcoming two months are expected to grow. According to the National Retail Federation, retail sales in November and December are projected to increase between 3.6% and 4% over last year, with an estimated total of $678.75 billion to $682 billion.
Consumers Gain Confidence
Another thing investors should consider is the renewed faith that Americans have in the economy. According to the University of Michigan, the U.S. Consumer Sentiment Index touched 101.1 this month, up from 95.1 last month. Such a record consumer confidence number is a significant reading since it has been historically good at predicting consumer spending for the next three to six months. The more confidence households generate, the more will they spend and, in turn, boost the revenues of retailers.
Household optimism was largely driven by falling gas prices and underlying strength in the labor market. A clearer view of last month’s labor market data, in the meanwhile, showed that keeping the effects of the hurricane aside, the U.S. employment scenario is continuing to tighten.
The unemployment rate declined to 4.2% last month, the lowest since February 2001, while wages increased 0.5% to an average of $26.55 an hour, per the Labor Department data. In fact, in the last 12 months, hourly pay increased 2.9%, up from 2.7% in the prior month and in-line with a post-recession high.
Looking Ahead to Q3 Earnings: 5 Solid Choices
As retailers have staged a comeback, they are likely to see steady growth in the third-quarter reporting cycle. This calls for investing in five retail stocks, which are expected to report a significant uptick in Q3 earnings.
These stocks have a positive Earnings ESP. This is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or #2 (Buy).
DSW Inc. is a footwear retailer. The company offers an assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids. The company currently has a Zacks Rank #1 (Strong Buy). It is expected to report earnings results for the quarter ending in October on Nov. 28. DSW has an Earnings ESP of +1.41%. The company’s expected earnings growth rate for the current year is 2.4%, in contrast to the industry’s projected decline of 7.5%.
Shoe Carnival, Inc. (SCVL - Free Report) is a family footwear retailer. The company primarily sells footwear and related products through its retail stores in approximately 30 states within the continental United States. Right now, the company has a Zacks Rank #2 (Buy). It is expected to report its latest quarterly earnings on Nov. 27. Shoe Carnival has an Earnings ESP of +0.79%. Shoe Carnival’s for the current year are projected to swell 3.2%, in contrast to the industry’s projected decline of 7.5%.
Williams-Sonoma, Inc. (WSM - Free Report) is a multi-channel specialty retailer of products for the home. Currently, the company has a Zacks Rank #2 (Buy). It is expected to report earnings results for the quarter ending in October on Nov. 16. Williams-Sonoma has an Earnings ESP of +0.26%. This year, the company’s earnings are expected to gain 4.7%, higher than the industry’s estimated growth of 0.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Big Lots, Inc. (BIG - Free Report) is a non-traditional, discount retailer operating in the United States. The company has a Zacks Rank #2 (Buy). It is expected to report its latest quarterly earnings results on Dec. 1. Big Lots has an Earnings ESP of +15.39%. The company’s expected earnings growth rate for the current year is 16%, better than the industry’s projected growth of 14.8%.
Best Buy Co Inc (BBY - Free Report) is a provider of technology products, services and solutions. The company has a Zacks Rank #2 (Buy) right now. It is expected to report earnings results for the third quarter on Nov. 16. Best Buy has an Earnings ESP of +1.85%. The company’s expected earnings growth rate for the current year is 13.8%, which bests the industry’s estimated growth of 4.2%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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5 of the Best Retail Stocks to Buy Ahead of Q3 Earnings
It has been quite challenging for retailers over the past several years, with many facing store closures. Growth in e-commerce significantly changed the way consumers shop, while natural calamities like hurricanes impacted many retailers more recently.
Even though retailers mostly flopped this year, things are starting to turn around. Many retailers are poised to open new stores as September sales rose at the highest rate since 2015. And with the holiday shopping season around the corner, sales are expected to improve.
Meanwhile, consumer confidence crushed expectations and scaled to its highest level in October since 2004. As American consumers are gaining confidence in the economy, things are looking up for retailers. Thus, let us keep an eye on retail stocks that are likely to make the most of the third-quarter earnings season.
Is the Retail Death Overhyped?
Investors have been concerned about a sizeable number of bankruptcies and store closures in the retail space over the last several years. Sporting goods, clothing, and electronics retailers, in particular, closed stores to curtail expenses and subsequently drive profits. There has also been a significant decline in comparable-store sales, mostly due to a rise in online deals.
However, of late, companies closing stores are often referred to as attention-seeking, as a large number of stores are actually being opened. As per IHL Group, the total net increase of stores planned for 2017, including retail and restaurants, is 4,080. Core retail stores, which excludes restaurants, are anticipated to see a net gain of 1,326 this year.
The store openings are mainly driven by a broad-based gain in retail sales last month, including those that have been the hardest hit by bankruptcies and store closures over the past year. Overall U.S. retail sales climbed 1.6% in September from August, marking the highest increase since March 2015. Retail sales received a sizeable boost from automobiles, gasoline stations, and building materials. Excluding such categories and foodservices, retail sales were up 0.4%.
Holidays Right Around the Corner
Retail sales are expected to gain further traction this year thanks to the upcoming holiday shopping season. Both Black Friday and Cyber Monday, historically, have seen retail sales move north. According to Adobe Digital Insights, consumers had spent a solid $3.34 billion on Black Friday and $3.45 billion on Cyber Monday.
Respondents surveyed said that Wal-Mart Stores Inc (WMT - Free Report) is the most sought-after destination for the upcoming Black Friday weekend, while Amazon.com, Inc. (AMZN - Free Report) is the top destination for the Cyber Monday holiday.
In fact, this year, holiday retail sales for the upcoming two months are expected to grow. According to the National Retail Federation, retail sales in November and December are projected to increase between 3.6% and 4% over last year, with an estimated total of $678.75 billion to $682 billion.
Consumers Gain Confidence
Another thing investors should consider is the renewed faith that Americans have in the economy. According to the University of Michigan, the U.S. Consumer Sentiment Index touched 101.1 this month, up from 95.1 last month. Such a record consumer confidence number is a significant reading since it has been historically good at predicting consumer spending for the next three to six months. The more confidence households generate, the more will they spend and, in turn, boost the revenues of retailers.
Household optimism was largely driven by falling gas prices and underlying strength in the labor market. A clearer view of last month’s labor market data, in the meanwhile, showed that keeping the effects of the hurricane aside, the U.S. employment scenario is continuing to tighten.
The unemployment rate declined to 4.2% last month, the lowest since February 2001, while wages increased 0.5% to an average of $26.55 an hour, per the Labor Department data. In fact, in the last 12 months, hourly pay increased 2.9%, up from 2.7% in the prior month and in-line with a post-recession high.
Looking Ahead to Q3 Earnings: 5 Solid Choices
As retailers have staged a comeback, they are likely to see steady growth in the third-quarter reporting cycle. This calls for investing in five retail stocks, which are expected to report a significant uptick in Q3 earnings.
These stocks have a positive Earnings ESP. This is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or #2 (Buy).
DSW Inc. is a footwear retailer. The company offers an assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids. The company currently has a Zacks Rank #1 (Strong Buy). It is expected to report earnings results for the quarter ending in October on Nov. 28. DSW has an Earnings ESP of +1.41%. The company’s expected earnings growth rate for the current year is 2.4%, in contrast to the industry’s projected decline of 7.5%.
Shoe Carnival, Inc. (SCVL - Free Report) is a family footwear retailer. The company primarily sells footwear and related products through its retail stores in approximately 30 states within the continental United States. Right now, the company has a Zacks Rank #2 (Buy). It is expected to report its latest quarterly earnings on Nov. 27. Shoe Carnival has an Earnings ESP of +0.79%. Shoe Carnival’s for the current year are projected to swell 3.2%, in contrast to the industry’s projected decline of 7.5%.
Williams-Sonoma, Inc. (WSM - Free Report) is a multi-channel specialty retailer of products for the home. Currently, the company has a Zacks Rank #2 (Buy). It is expected to report earnings results for the quarter ending in October on Nov. 16. Williams-Sonoma has an Earnings ESP of +0.26%. This year, the company’s earnings are expected to gain 4.7%, higher than the industry’s estimated growth of 0.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Big Lots, Inc. (BIG - Free Report) is a non-traditional, discount retailer operating in the United States. The company has a Zacks Rank #2 (Buy). It is expected to report its latest quarterly earnings results on Dec. 1. Big Lots has an Earnings ESP of +15.39%. The company’s expected earnings growth rate for the current year is 16%, better than the industry’s projected growth of 14.8%.
Best Buy Co Inc (BBY - Free Report) is a provider of technology products, services and solutions. The company has a Zacks Rank #2 (Buy) right now. It is expected to report earnings results for the third quarter on Nov. 16. Best Buy has an Earnings ESP of +1.85%. The company’s expected earnings growth rate for the current year is 13.8%, which bests the industry’s estimated growth of 4.2%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think. See This Ticker Free >>