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5 Retail Picks for a Dose of Confidence Amid Coronavirus-Crisis
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U.S. consumer confidence — a key determinant of the economy’s health — fell to the lowest level since June 2017, thanks to the coronavirus-induced crisis that has claimed innumerable lives, rattled the stock market and brought the economy to standstill. Per Conference Board data, the Consumer Confidence Index dropped to 120 in March from February’s revised reading of 132.6.
Economists cautioned that consumer’s confidence level is likely to sink further in the coming months, as the deadly virus has already started taking a toll on employment and household income. And any remedy at this juncture will take time to heal the wounds. With a record 3.3 million Americans filing for unemployment benefits in the week ending Mar 21, the scenario is alarming to say the least. In fact, it will not come as a surprise, if the numbers shoot up in the next release.
Market pundits have already signaled about the spike in unemployment rate and sharp fall in GDP as the United States becomes the country worst hit by the pandemic. Drop in sentiment and rising job losses are surely to impact consumer spending.
Due to the coronavirus outbreak, the retail sector has been dealt a massive blow. Supply-chain bottlenecks and reduced traffic has led to a number of store closures, which in turn hurt sales and productivity. Moreover, some of the companies are even slashing pays and furloughing employees. They are even suspending dividend payouts and halting share buybacks to shore up the balance sheet.
Well we still don’t know how long this battle with COVID-19 will be. But meanwhile policymakers are using every tool — slashing benchmark interest rate and announcing stimulus plan — to halt economic meltdown. President Trump signed a $2-trillion economic relief package aimed at assisting workers, small industries and distressed companies on the brink of extinction. To further blunt the coronavirus-inflicted damage, the President is pushing for another $2 trillion infrastructure package, citing low interest rate environment.
Experts believe that once the coronavirus spread is contained and vaccine discovered, the retail sector, which touches every sphere of our life, is likely to witness a sharp rebound. Even now there are stocks that could be a great addition to your portfolio.
Investors can count on Sprouts Farmers Market (SFM - Free Report) , which provides fresh, natural, and organic food products. This Zacks Rank #1 company has a long-term earnings growth rate of 5.8% and a VGM Score of B. It has a trailing four-quarter positive earnings surprise of 28.7%, on average. Moreover, the Zacks Consensus Estimate for its current financial year earnings has moved up 4.8% in the past 30 days.
You may also consider Lumber Liquidators Holdings (LL - Free Report) , which operates as a multi-channel specialty retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories. The stock sports a Zacks Rank #1 and a VGM Score of A. The company’s bottom line has outpaced the Zacks Consensus Estimate by a wide margin in the last reported quarter. Moreover, the Zacks Consensus Estimate for its current financial year earnings has improved by a couple of cents in the past 30 days. The company has a long-term earnings growth rate of 27.5%.
Costco (COST - Free Report) , which operates membership warehouses, is a solid bet with a Zacks Rank #2 and a VGM Score of B. The company has a trailing four-quarter positive earnings surprise of 3.1%, on average and a long-term earnings growth rate of 8.4%. The Zacks Consensus Estimate for its current financial year earnings has improved 1.6% in the past 30 days.
We also suggest investing in Best Buy (BBY - Free Report) with a long-term earnings growth rate of 7.6%. This retailer of technology products, services, and solutions has a trailing four-quarter positive earnings surprise of 9.7%, on average. The stock has a Zacks Rank #2 and a VGM Score of A.
Another stock worth considering is Rite Aid , which operates a chain of retail drugstores. The company’s bottom line has outpaced the Zacks Consensus Estimate in the last two reported quarters. The stock has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current financial year earnings has increased by a penny in the past 30 days.
Today's Best Stocks from Zacks
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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5 Retail Picks for a Dose of Confidence Amid Coronavirus-Crisis
U.S. consumer confidence — a key determinant of the economy’s health — fell to the lowest level since June 2017, thanks to the coronavirus-induced crisis that has claimed innumerable lives, rattled the stock market and brought the economy to standstill. Per Conference Board data, the Consumer Confidence Index dropped to 120 in March from February’s revised reading of 132.6.
Economists cautioned that consumer’s confidence level is likely to sink further in the coming months, as the deadly virus has already started taking a toll on employment and household income. And any remedy at this juncture will take time to heal the wounds. With a record 3.3 million Americans filing for unemployment benefits in the week ending Mar 21, the scenario is alarming to say the least. In fact, it will not come as a surprise, if the numbers shoot up in the next release.
Market pundits have already signaled about the spike in unemployment rate and sharp fall in GDP as the United States becomes the country worst hit by the pandemic. Drop in sentiment and rising job losses are surely to impact consumer spending.
Due to the coronavirus outbreak, the retail sector has been dealt a massive blow. Supply-chain bottlenecks and reduced traffic has led to a number of store closures, which in turn hurt sales and productivity. Moreover, some of the companies are even slashing pays and furloughing employees. They are even suspending dividend payouts and halting share buybacks to shore up the balance sheet.
Well we still don’t know how long this battle with COVID-19 will be. But meanwhile policymakers are using every tool — slashing benchmark interest rate and announcing stimulus plan — to halt economic meltdown. President Trump signed a $2-trillion economic relief package aimed at assisting workers, small industries and distressed companies on the brink of extinction. To further blunt the coronavirus-inflicted damage, the President is pushing for another $2 trillion infrastructure package, citing low interest rate environment.
Experts believe that once the coronavirus spread is contained and vaccine discovered, the retail sector, which touches every sphere of our life, is likely to witness a sharp rebound. Even now there are stocks that could be a great addition to your portfolio.
5 Prominent Picks
We have shortlisted stocks on the basis 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.
Investors can count on Sprouts Farmers Market (SFM - Free Report) , which provides fresh, natural, and organic food products. This Zacks Rank #1 company has a long-term earnings growth rate of 5.8% and a VGM Score of B. It has a trailing four-quarter positive earnings surprise of 28.7%, on average. Moreover, the Zacks Consensus Estimate for its current financial year earnings has moved up 4.8% in the past 30 days.
You may also consider Lumber Liquidators Holdings (LL - Free Report) , which operates as a multi-channel specialty retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories. The stock sports a Zacks Rank #1 and a VGM Score of A. The company’s bottom line has outpaced the Zacks Consensus Estimate by a wide margin in the last reported quarter. Moreover, the Zacks Consensus Estimate for its current financial year earnings has improved by a couple of cents in the past 30 days. The company has a long-term earnings growth rate of 27.5%.
Costco (COST - Free Report) , which operates membership warehouses, is a solid bet with a Zacks Rank #2 and a VGM Score of B. The company has a trailing four-quarter positive earnings surprise of 3.1%, on average and a long-term earnings growth rate of 8.4%. The Zacks Consensus Estimate for its current financial year earnings has improved 1.6% in the past 30 days.
We also suggest investing in Best Buy (BBY - Free Report) with a long-term earnings growth rate of 7.6%. This retailer of technology products, services, and solutions has a trailing four-quarter positive earnings surprise of 9.7%, on average. The stock has a Zacks Rank #2 and a VGM Score of A.
Another stock worth considering is Rite Aid , which operates a chain of retail drugstores. The company’s bottom line has outpaced the Zacks Consensus Estimate in the last two reported quarters. The stock has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current financial year earnings has increased by a penny in the past 30 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>