For Immediate Release
Chicago, IL –October 10, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Zumiez Inc. (ZUMZ - Free Report) , RH (RH - Free Report) , Lithia Motors, Inc. (LAD - Free Report) and Target Corp. (TGT - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
4 Retail Stocks to Power Your Portfolio Ahead of Holiday Season
Concerns related to U.S.-China trade tiff, volatility in crude prices, sluggish business spending and certain geopolitical problems are enough to dampen consumers’ enthusiasm ahead of the holiday season. In fact, imposition of tariffs has left some of the retailers with no other choice than to go for selective price increases. These may have a direct bearing on consumer spending, which remains one of the pivotal factors driving the economy.
Well if consumers choose to tighten purse strings and curtail their discretionary spending, retailers have to tough it out this shopping season. Apart from these, a strong U.S. dollar is likely to hit tourism, while a warmer winter may impact the sale of seasonal apparel and merchandise. Again, retailers will get six fewer days between Thanksgiving and Christmas this time compared with last year.
Undoubtedly, the sector’s prospects are closely tied to the purchasing power of consumers. Well consumers remain in good shape, courtesy of a solid job market as evident from the 50-year low unemployment rate of 3.5% in September. Further, the economy added a modest 136,000 jobs last month. Moreover, the data for the month of August was revised up to 168,000 from the previously reported 130,000 jobs created. A sturdy labor market is likely to stimulate consumer spending during the festive season.
Going by National Retail Federation’s ("NRF") recent holiday sales projection, retailers are all set to revel again in the euphoria of the upcoming festive season. Markedly, NRF now envisions holiday retail sales to advance 3.8-4.2% this season (excluding automobiles, restaurants and gasoline). Online and other non-store sales are expected to grow 11-14%. Last year, holiday sales rose just 2.1%, per NRF.
Further, data compiled by Deloitte indicates that holiday sales are expected to increase 4.5-5% and exceed $1.1 trillion between November 2019 and January 2020. Meanwhile, e-commerce sales are estimated to improve 14-18% to reach $144-149 billion. Numbers look robust compared with last year, when sales in December were affected by U.S. government shut down, battered stock market and increase in consumer savings.
The aforementioned discussion clearly suggests that consumers will splurge, in spite of the lingering issues. Here we have highlighted four retail stocks based on a favorable combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy), and VGM Score of A or B.
4 Prominent Picks
Zumiez Inc., which operates as a specialty retailer of apparel, footwear, accessories, and hardgoods, is a solid bet with a long-term earnings growth rate of 12%. This Zacks Rank #1 company has an average positive earnings surprise of 60.9% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for its current-year earnings suggests a year-over-year improvement of 20.7%. The stock, with a VGM Score of A, has advanced 57.1% so far this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can also consider RH, a home furnishing retailer, with a Zacks Rank #1 and a VGM Score of B. The company has an average positive earnings surprise of 20.2% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for its current-year earnings suggests a year-over-year improvement of 26.6%. We note that the stock with a long-term earnings growth rate of 12.5% has rallied 45% year to date.
Lithia Motors, Inc., an automotive retailer, is another attractive option. The stock has a VGM Score of A and long-term earnings growth rate of 9.2%. This Zacks Rank #2 company has an average positive earnings surprise of 8% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for its current-year earnings indicates a year-over-year improvement of 12.9%. We note that the stock has surged 58.6% year to date.
Investors can also count on Target Corp., which offers beauty and household essentials, food assortments, apparel and home decor products. This Zacks Rank #2 company has a long-term earnings growth rate of 7.1% and a VGM Score of A. It has soared 64.2% so far in 2019. Moreover, the company has an average positive earnings surprise of 4.6% for the trailing four quarters. Further, the Zacks Consensus Estimate for its current-year earnings suggests a year-over-year improvement of 14.1%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.