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5 Beaten-Down Retail Stocks Set to Rebound in 2019

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Retail-Wholesale sector is quite competitive and fragmented with companies vying for a bigger slice of the market on attributes such as price, products and speed-to-market. No wonder, 2018 has been a roller coaster ride for the space, which has witnessed fundamental changes in its dynamics with technology taking the center stage and online shopping gaining preference over traditional ways.

Thanks to this transition of consumers, who now prefer to shop online rather than visiting stores, the industry as a whole is facing two primary challenges. First, companies need to constantly upgrade themselves digitally to take on e-retailers. Second, retailers need to come up with innovative ways to draw customers to brick-&-mortar outlets. To be more precise, players in the industry have to play dual in-store and online role.

Certainly, retailers have taken initiatives to stay in the race and cater to growing customer needs. From opening smaller-format stores to bringing in new loyalty program and from embracing new technologies to providing fast delivery options on online purchase or via apps, they have been looking at every nook and cranny for solutions to survive.

Notably, better price, omni-channel capabilities and unique products are requisites for brick-&-mortar retailers to stay competitive with pure e-commerce players. However, higher digital marketing investments and constant store remodeling and refurbishments add to costs. This may strain margins in the short run.

Definitely, some players in the space took a while to accommodate and evolve with changes in the retail landscape. But with right strategies in right place and right direction they hold promise in 2019. This is also quite well reflected from their Zacks Rank of either #1 (Strong Buy) or 2 (Buy). Moreover, a favorable consumer environment courtesy of a robust job market and higher disposable income is also working in favor of the sector. You can see the complete list of today’s Zacks #1 Rank stocks here.



Here we have highlighted five stocks that have lost more than 20% year to date but still looks well poised for the upcoming year based on their strong fundamentals and solid earnings growth prospects.

5 Prominent Picks

Investors can count on Titan Machinery Inc. (TITN - Free Report) , which owns and operates a network of full-service agricultural and construction equipment stores. This Zacks Rank #1 company has delivered average positive earnings surprise of 68.7% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for the next financial year has remained stable at $1.08 over the past 30 days and reflects a sharp year over year improvement of roughly 61%. We note that the stock has fallen 32.1% year to date.

Tapestry, Inc. (TPR - Free Report) , which provides luxury accessories and lifestyle brands, is a solid bet with a long-term earnings growth rate of 11.3%. This Zacks Rank #2 company has delivered average positive earnings surprise of 11.7% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for the next financial year has improved by three cents to $3.08 over the past 60 days and reflects year-over-year growth of 10.6%. We note that the stock has fallen 21.5% so far in the year.

You can also consider Office Depot, Inc. (ODP - Free Report) , an office supply retailing company. This Zacks Rank #2 company has delivered average positive earnings surprise of 11.9% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for 2019 has risen by a couple of cents to 39 cents over the past 60 days and reflects year-over-year growth of 18.2%. We note that the stock has fallen 26.2% year to date.

Rush Enterprises, Inc. (RUSHA - Free Report) , an integrated retailer of commercial vehicles and related services, is another lucrative option. The stock has a long-term earnings growth rate of 15%. This Zacks Rank #2 company has delivered average positive earnings surprise of 26.6% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for 2019 has increased by 9 cents to $3.74 over the past 60 days and reflects year-over-year growth of 5.5%. We note that the stock has fallen 36.7% so far in the year.

We also suggest investing in Xcel Brands, Inc. (XELB - Free Report) , which operates as a consumer products company.  This Zacks Rank #2 company has a long-term earnings growth rate of 10%. Moreover, the Zacks Consensus Estimate of earnings for 2019 is currently pegged at 36 cents, reflecting year-over-year increase of 20%. We note that the stock has fallen 64.2% year to date.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>



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