We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
6 Stocks to Buy as Retail Sales Defy Expectations in July
Read MoreHide Full Article
Retail sales increased more than expected in July, as households spent more at restaurants, department stores and apparel outlets. Spending also rose on autos, suggesting that the economy retains sufficient steam even in the middle of summer. A raft of other positive economic reports also suggests that the U.S. economy is slated to expand significantly in the third quarter.
A jump in core retail sales also suggests that consumer spending continues to be robust. The increase in expenditure is being supported by a tighter labor market, which is pushing up wages. Higher savings and tax cuts are providing a firm foundation for higher consumption. This is why it makes good sense to invest in retail stocks at this point.
Consumer Spending Remains Robust in Midsummer
According to the Department of Commerce, retail sales increased by 0.5% during the month of July, exceeding the consensus estimate of 0.1%. However, June’s increase was revised downward, from 0.5% to 0.2%. Excluding auto dealers and gas stations, retail sales increased by 0.6%.
Retail sales have increased 6.4% over the past year, nearly in-line with the long-run average since 1980. Further, core retail sales, which exclude autos, building materials and food services, increased by 0.5% in July. This metric closely corresponds to the consumer spending component of GDP.
In June, core retail sales had remained flat. But it is now clear that consumer spending is being fueled by a tight labor market which is steadily boosting wages. Higher savings and tax cuts are also providing a firm basis for an increase in consumption.
Restaurants, Department and Apparel Stores Lead Gains
Gains were noticed across eight out of 13 categories. Sales at clothing stores rebounded, increasing by 1.3% after a 1.6% decline in June. Expenditure at bars and restaurants improved, boosting sales by 1.3%. Americans also spent more at department stores, with sales rising by 1.2% following a 2.1% decline in June.
Sales at nonstore retailers increased by 0.8%, possibly due to the success of Amazon’s recent promotions on “Prime Day.” Auto sales advanced by 0.2%, maintaining the pace set in June. Sales at gasoline stations increased by 0.8% while sales at food and beverage stores advanced by 0.6%.
Some major retail categories also suffered declines. Furniture and home furnishing stores experienced a 0.5% decline in sales. Sales at sporting goods, hobby, musical instrument and book stores fell by 1.7%, marking the fourth successive month of declines. Sales at building material stores remained unchanged.
Our Choices
The increase in retail sales for July is an indication that the economy retains enough steam well into midsummer. Data on industrial production and non-farm productivity also suggests that the economy remains robust early in the third quarter.
Consumer spending is likely to maintain its current pace in the months ahead, as wage gains remain steady in a tight labor market. Tax cuts and higher savings are also providing a firm basis for higher consumption. Investing in retail stocks looks like a smart move at this time. However, picking winning stocks may be difficult.
This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM Score.
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates a chain of 198 high-end casual dining restaurants in the United States (as of Apr 3, 2018), which serve its signature deep-dish pizzas, salads, sandwiches, burgers, pastas, steaks, and hand-crafted beers.
BJ's Restaurants has a Zacks Rank #1 (Strong Buy) and VGM Score of B. The company has expected earnings growth of 50.2% for the current year The Zacks Consensus Estimate for the current year has improved by 5.9% over the last 30 days.
Boot Barn Holdings, Inc. (BOOT - Free Report) operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories.
Boot Barn Holdings has a VGM Score of B. The company has expected earnings growth of 63.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 4.9% over the last 30 days. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target Corporation (TGT - Free Report) operates as a general merchandise retailer in the United States.
Target has a Zacks Rank #2 (Buy) and VGM Score of A. The company has expected earnings growth of 12.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the last 30 days.
Dollar General Corporation (DG - Free Report) is one of the largest discount retailers in the United States.
Dollar General carries a Zacks Rank #2 and has a VGM Score of A. The company has expected earnings growth of 35% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.1% over the last 30 days.
Darden Restaurants, Inc. (DRI - Free Report) is one of the largest casual dining restaurant operators worldwide.
Darden Restaurants carries a Zacks Rank #2 and has a VGM Score of B. The company has expected earnings growth of 14.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the last 30 days.
Urban Outfitters Inc. (URBN - Free Report) is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products.
Urban Outfitters carries a Zacks Rank #2 and has a VGM Score of B. The company has expected earnings growth of 49.9% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 60 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
6 Stocks to Buy as Retail Sales Defy Expectations in July
Retail sales increased more than expected in July, as households spent more at restaurants, department stores and apparel outlets. Spending also rose on autos, suggesting that the economy retains sufficient steam even in the middle of summer. A raft of other positive economic reports also suggests that the U.S. economy is slated to expand significantly in the third quarter.
A jump in core retail sales also suggests that consumer spending continues to be robust. The increase in expenditure is being supported by a tighter labor market, which is pushing up wages. Higher savings and tax cuts are providing a firm foundation for higher consumption. This is why it makes good sense to invest in retail stocks at this point.
Consumer Spending Remains Robust in Midsummer
According to the Department of Commerce, retail sales increased by 0.5% during the month of July, exceeding the consensus estimate of 0.1%. However, June’s increase was revised downward, from 0.5% to 0.2%. Excluding auto dealers and gas stations, retail sales increased by 0.6%.
Retail sales have increased 6.4% over the past year, nearly in-line with the long-run average since 1980. Further, core retail sales, which exclude autos, building materials and food services, increased by 0.5% in July. This metric closely corresponds to the consumer spending component of GDP.
In June, core retail sales had remained flat. But it is now clear that consumer spending is being fueled by a tight labor market which is steadily boosting wages. Higher savings and tax cuts are also providing a firm basis for an increase in consumption.
Restaurants, Department and Apparel Stores Lead Gains
Gains were noticed across eight out of 13 categories. Sales at clothing stores rebounded, increasing by 1.3% after a 1.6% decline in June. Expenditure at bars and restaurants improved, boosting sales by 1.3%. Americans also spent more at department stores, with sales rising by 1.2% following a 2.1% decline in June.
Sales at nonstore retailers increased by 0.8%, possibly due to the success of Amazon’s recent promotions on “Prime Day.” Auto sales advanced by 0.2%, maintaining the pace set in June. Sales at gasoline stations increased by 0.8% while sales at food and beverage stores advanced by 0.6%.
Some major retail categories also suffered declines. Furniture and home furnishing stores experienced a 0.5% decline in sales. Sales at sporting goods, hobby, musical instrument and book stores fell by 1.7%, marking the fourth successive month of declines. Sales at building material stores remained unchanged.
Our Choices
The increase in retail sales for July is an indication that the economy retains enough steam well into midsummer. Data on industrial production and non-farm productivity also suggests that the economy remains robust early in the third quarter.
Consumer spending is likely to maintain its current pace in the months ahead, as wage gains remain steady in a tight labor market. Tax cuts and higher savings are also providing a firm basis for higher consumption. Investing in retail stocks looks like a smart move at this time. However, picking winning stocks may be difficult.
This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM Score.
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates a chain of 198 high-end casual dining restaurants in the United States (as of Apr 3, 2018), which serve its signature deep-dish pizzas, salads, sandwiches, burgers, pastas, steaks, and hand-crafted beers.
BJ's Restaurants has a Zacks Rank #1 (Strong Buy) and VGM Score of B. The company has expected earnings growth of 50.2% for the current year The Zacks Consensus Estimate for the current year has improved by 5.9% over the last 30 days.
Boot Barn Holdings, Inc. (BOOT - Free Report) operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories.
Boot Barn Holdings has a VGM Score of B. The company has expected earnings growth of 63.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 4.9% over the last 30 days. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target Corporation (TGT - Free Report) operates as a general merchandise retailer in the United States.
Target has a Zacks Rank #2 (Buy) and VGM Score of A. The company has expected earnings growth of 12.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the last 30 days.
Dollar General Corporation (DG - Free Report) is one of the largest discount retailers in the United States.
Dollar General carries a Zacks Rank #2 and has a VGM Score of A. The company has expected earnings growth of 35% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.1% over the last 30 days.
Darden Restaurants, Inc. (DRI - Free Report) is one of the largest casual dining restaurant operators worldwide.
Darden Restaurants carries a Zacks Rank #2 and has a VGM Score of B. The company has expected earnings growth of 14.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the last 30 days.
Urban Outfitters Inc. (URBN - Free Report) is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products.
Urban Outfitters carries a Zacks Rank #2 and has a VGM Score of B. The company has expected earnings growth of 49.9% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 60 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>