Consumer confidence surged once again to help set up what could be another strong quarterly performance from the retail sector. With September’s Consumer Confidence Index closing in on an 18-year high, let’s look at three retail stocks that might be worth buying at the moment.
The retail industry shined last quarter on the back of positive momentum from Walmart (WMT - Free Report) , Target (TGT - Free Report) , and Home Depot (HD - Free Report) , among others. And consumer confidence continues to climb.
The Consumer Confidence Index, which is calculated based on a Nielsen survey, reached 138.4 in September. This marked a roughly 2.7% surge from August’s 134.7. More specifically, the Present Situation Index climbed from 172.8 to 173.1, while the Expectations Index jumped by over 5% from 109.3 to 115.3. The Conference Board said that September’s reading was “not far from the all-time high of 144.7 reached in 2000.”
“Consumers' assessment of current conditions remains extremely favorable, bolstered by a strong economy and robust job growth,” Director of Economic Indicators at The Conference Board, Lynn Franco, said in a statement. “The Expectations Index surged in September, suggesting solid economic growth exceeding 3.0 percent for the remainder of the year. These historically high confidence levels should continue to support healthy consumer spending, and should be welcome news for retailers as they begin gearing up for the holiday season."
With this recent consumer confidence growth in mind, we will dive into three retail stocks that look like solid buys at the moment.
Urban Outfitters (URBN - Free Report)
Shares of Urban Outfitters have plummeted over 13% in the last three months despite strong second-quarter financial results after the lifestyle and clothing retailer’s stock price had been run up throughout the previous three quarters. This actually presents investors a great time to buy URBN on the dip.
Urban’s third-quarter revenues are projected to pop by 8.7% to reach $970.38 million, based on our current Zacks Consensus Estimate. The company’s current fiscal year revenues are expected to jump 9.6%. Meanwhile, URBN’s adjusted quarterly earnings are projected to soar by nearly 54% to reach $0.63 per share, with its full-year EPS figure expected to expand by over 59%.
Maybe more importantly, Urban has received 11 upward earnings estimate revisions for Q3 and 13 for its current fiscal year over the last 60 days, against no downward changes. Urban is currently a Zacks Rank #1 (Strong Buy) and sports an overall “A” VGM score.
Callaway Golf Company (ELY - Free Report)
The golf equipment giant has seen its stock price soar over the last year. Shares of ELY have also crushed the S&P 500 in the last six months, up 42% against the index’s 10% climb. Callaway stock hit a new 52-week high of $23.93 per share Tuesday. Luckily for investors, ELY stock looks ready to keep on rolling.
Callaway is expected to see its full-year revenues jump by nearly 16.8% to hit $1.23 billion. Investors should be even more pleased to see the firm’s bottom-line projection for its current fiscal year. Callaway is expected to see its adjusted fiscal year earnings skyrocket by nearly 89% to $1.00 per share. Plus, over the last 60 days ELY has earned 10 upward earnings estimate revisions for its current year and following fiscal year, with 100% agreement to the upside.
Callaway is currently a Zack Rank #1 (Strong Buy) and boasts an “A” grade for Growth in our Style Scores system.
Amazon (AMZN - Free Report)
It might seem too easy to put Amazon on this list of retail stocks to buy right now. Others might suggest that the company’s expansion into new growth areas places it outside of this sector. However, Jeff Bezos’ firm is still an e-commerce and retail powerhouse, with net product sales accounting for roughly 60% of total second-quarter revenues.
Looking ahead, Amazon is expected to see its Q3 revenues jump just over 30% to reach $56.92 billion. AMZN’s fiscal year revenues are projected to reach $234.35 billion, which would mark 31.8% growth. Investors should also note that Amazon’s adjusted Q3 earnings are projected to skyrocket 525% to $3.25 per share, while full-year earnings are expected to soar by approximately 290%.
Amazon is currently a Zacks Rank #2 (Buy) and rocks an “A” grade for Growth in our Style Scores system.
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