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5 Retail Stocks to Give You a Jolt of Confidence in 2019

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Consumer confidence took a hit this December, stumbling to the lowest level since July owing to issues like the U.S.-China trade conflict, volatile crude prices, tightening of monetary policy, partial government shutdown and slowing global economy. Fading of tax-cut benefit and concerns related to the moderating pace of economic growth in 2019 were other dampening factors.

Analysts pointed that the Fed, which raised the benchmark interest rates four times this year, is projecting two hikes next year in the wake of market gyrations and other geopolitical tensions that may have a direct or an indirect bearing on the U.S. economy. It lowered the U.S. GDP growth rate outlook to 2.3% from 2.5% for 2019.

Well, per the latest Conference Board data, the Consumer Confidence Index dropped to 128.1 in December from November’s reading of 136.4 and lagged analysts’ expectations. This reflects the lingering fear in investors that the distressing factors will weigh on markets in 2019 as well.

Nonetheless, some experts look on the sunny side, with a strengthening labor market and rising disposable income likely to drive consumer spending. An uptick in this metric is welcome news for retailers. Notably, the number of Americans claiming unemployment benefits slipped to near a 49-year low last week, with the unemployment rate at 3.7%.

Meanwhile, a report from Mastercard SpendingPulse indicates that sales from Nov 1 through Dec 24 increased 5.1% to more than $850 billion. Rise in sales not only add to the holiday euphoria but also provide an opportune time to invest in retail stocks for 2019. It is hard to predict what awaits investors next year. But the wisest thing to do now is to make your portfolio resilient to unforeseen adversities by adding favorably-ranked stocks backed by sturdy fundamentals.

Having said that we have highlighted five Retail-Wholesale stocks with an encouraging combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.

5 Prominent Picks

Investors can count on Abercrombie & Fitch Co. (ANF - Free Report) , a specialty retailer with a long-term earnings growth rate of 12.5%. This Zacks Rank #1 company has delivered average positive earnings surprise of 88.6% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for fiscal 2019 earnings has risen 15.9% to 95 cents over the past 30 days and reflects a year-over-year improvement of roughly 4%.

RH (RH - Free Report) , a home furnishing retailer, is a solid bet with a long-term earnings growth rate of 17.5%. This Zacks Rank #1 company has delivered average positive earnings surprise of 23.5% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for fiscal 2019 earnings has improved 14.3% to $9.49 over the past 30 days and reflects year-over-year growth of 13.1%.

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 for 2019 earnings has risen by a couple of cents to 39 cents over the past 60 days and reflects year-over-year growth of 18.2%.

Urban Outfitters, Inc. (URBN - Free Report) , a lifestyle products and services company, seems like another profitable pick. The stock has a long-term earnings growth rate of 11.2%. This Zacks Rank #2 company has delivered average positive earnings surprise of 14.5% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for earnings of the next financial year has increased by 4 cents to $2.93 over the past 60 days and reflects year-over-year growth of 7.3%.

We also suggest investing in Canada Goose Holdings Inc. (GOOS - Free Report) , which designs, manufactures, and sells premium outdoor apparel. This Zacks Rank #2 company has a long-term earnings growth rate of 31.3%. Moreover, the Zacks Consensus Estimate for earnings of the next financial year has moved up by 11 cents to $1.22 over the past 60 days and reflects year-over-year growth of 28.3%.

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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