Back to top

4 Top-Ranked Retail Stocks to Buy Before Christmas

Read MoreHide Full Article

The holiday season is approaching its peak, and the shopping frenzy is hitting the shops and streets again. However, it’s not only presents that we brainstorm for ahead of Christmas -- zeroing in on a hot spot to celebrate the Christmas weekend also tops our last-minute to-do list. Now if an ardent investor is worried about ignoring their portfolio at this moment, we would like to make investment decisions easier with four top-ranked Retail-Wholesale stocks.

The sector has suddenly become one of investors’ favorites, thanks to the auspicious start to the holiday-shopping season and the tax reform bill, which if passed is likely to lower the burden of retailers. The sector has gained 28.7% so far in the year, comfortably outperforming the S&P 500 Index, which advanced 19.2%.

Retail Season Demand

Improving labor market, rising disposable income and elevated consumer sentiment have ushered confidence in retailers about a robust holiday season. The festive season is often a make-or-break time for retailers, as it accounts for a sizeable chunk of yearly revenues and profits.

Indeed, shopping season is likely to be more blissful for retailers. With Christmas falling on Monday and 32 days after Thanksgiving, shoppers are getting one extra day compared with last year and an extended weekend to do last minute purchasing.

Overall, NRF projects a 3.6-4% rise in November and December sales (excluding autos, gas and restaurant sales) to $678.75-$682 billion, up from $655.8 billion last year and better than the five-year average sales growth of 3.5%. Data compiled by eMarketer forecasts a 3.1% jump in holiday sales (November and December) to $923.15 billion, while retail e-commerce holiday season sales are anticipated to rise 16.6%.

Having said that, we believe the sector offers lucrative opportunities for investors to make their Christmas holidays special. Here we have highlighted four Retail/Wholesale stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of A or B. These stocks are backed by sound fundamentals, surging share price and a track record of better-than-expected results. Not only this, these stocks have outperformed their respective industries.

4 Prominent Picks

RH (RH - Free Report) , a home furnishing retailer, is a lucrative option. The stock has a long-term earnings growth rate of 34.4% and a VGM Score of A. We note that in a year, the stock has soared over 200%, while the industry has gained 10%. The company has delivered an average positive earnings surprise of 17% in the trailing four quarters and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

We also suggest investing in Wal-Mart Stores, Inc. (WMT - Free Report) with a long-term earnings growth rate of 6.1% and a VGM Score of B. In the past year, the stock has surged roughly 35% and outperformed the industry, which grew 27%. This operator of discount stores, supermarkets, hypermarkets and warehouse clubs delivered an average positive earnings surprise of 2.2% in the preceding four quarters and carries a Zacks Rank #2.

Investors can count on The Children's Place, Inc. (PLCE - Free Report) with a VGM Score of A and a long-term earnings growth rate of 9%. In a year, this Zacks Rank #2 stock has advanced roughly 28%, against the industry’s decline of 14.5%. This children's specialty apparel retailer delivered an average positive earnings surprise of 14% in the preceding four quarters.

Burlington Stores, Inc. (BURL - Free Report) , a retailer of branded apparel products, is also a lucrative option with a Zacks Rank #2 and a VGM Score of A. The company posted an average positive earnings surprise of 15.2% in the trailing four quarters and has a long-term earnings growth rate of 17.5%. The stock has surged 28.6% in the past year and comfortably outperformed the industry’s increase of only 6.1%.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>



More from Zacks Analyst Blog

You May Like