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Coronavirus Hits Retailers: 4 Stocks Still Worth a Shot
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A dramatic change in the economy has been noticed over the past three months, thanks to the coronavirus pandemic that also put an abrupt end to the longest bullish run in the America’s stock market history. In fact, the COVID-19 outbreak has claimed innumerable lives and brought economic activities to a standstill worldwide. There is hardly any industry that has been spared from the deadly impact of this virus. While the policy makers are walking the tight rope and undertaking every measure to support households, firms and financial markets, uncertainty looms large.
Economists have cautioned about sinking consumer confidence level, as this rare catastrophe has already started taking a toll on employment and household income. It goes without saying; these are likely to show on consumer spending with retailers at the receiving end. In the face of the pandemic, the retail sector is witnessing significantly lower revenues on prolonged store closures, supply-chain disruptions, lower traffic trends and limited store operating hours. The rising macroeconomic uncertainties and bare minimum revenue prospects have led companies to withdraw their guidance.
What is seen as a temporary blow to revenues and productivity due to the outbreak may have long-term implications. The latest Zacks Earnings Outlook shows that the sector’s bottom line is expected to decline 15.3% year over year during the ongoing earnings season and 8.9% in the current financial year. Companies are taking every step from pay cut to furloughing, from inventory reductions to curb capital expenditures in order improve financial flexibility and preserve cash flow.
No wonder, U.S. retail and food services sales in March fell 8.7% to $483.1 billion. Sales collapsed across a range of categories from Motor vehicles and parts dealers to Furniture & home furnishing stores and from Gasoline stations to Clothing & clothing accessories stores. However, there were still certain groups that recorded decent numbers. These include Health & personal care stores, Food & beverage stores and General merchandise stores. Clearly, people are shopping more of essential items rather making any discretionary purchases.
Moreover, as people are working from home and maintaining social distancing, players in the industry have been focusing on bolstering omni-channel operations and ramping up delivery services to meet customers’ needs. Recently, Tractor Supply Company (TSCO - Free Report) equipped itself to offer same-day delivery of its merchandise by expanding partnership with Roadie. Likewise, a leading food and grocery retailer Casey's (CASY - Free Report) recently expanded partnership with DoorDash to boost delivery capabilities.
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 3.7% 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 suggests an improvement of 8.8%.
Another stock worth considering is SpartanNash Company (SPTN - Free Report) , which distributes and retails grocery products. The company’s bottom line has outpaced the Zacks Consensus Estimate in the last reported quarter. The stock has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current financial-year earnings indicates a jump of 26.4%.
Dollar General Corporation (DG - Free Report) , a discount retailer, is a solid bet with a Zacks Rank #2 and a VGM Score of A. The company has a trailing four-quarter positive earnings surprise of 5.9%, on average. It has a long-term earnings growth rate of 12.2%. The Zacks Consensus Estimate for its current financial-year earnings suggests growth of 10.9%.
We also suggest investing in The Kroger Co. (KR - Free Report) with a long-term earnings growth rate of 4.9%. This grocery retailer has a trailing four-quarter positive earnings surprise of 2.1%, on average. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial-year earnings indicates an increase of 12.3%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Coronavirus Hits Retailers: 4 Stocks Still Worth a Shot
A dramatic change in the economy has been noticed over the past three months, thanks to the coronavirus pandemic that also put an abrupt end to the longest bullish run in the America’s stock market history. In fact, the COVID-19 outbreak has claimed innumerable lives and brought economic activities to a standstill worldwide. There is hardly any industry that has been spared from the deadly impact of this virus. While the policy makers are walking the tight rope and undertaking every measure to support households, firms and financial markets, uncertainty looms large.
Economists have cautioned about sinking consumer confidence level, as this rare catastrophe has already started taking a toll on employment and household income. It goes without saying; these are likely to show on consumer spending with retailers at the receiving end. In the face of the pandemic, the retail sector is witnessing significantly lower revenues on prolonged store closures, supply-chain disruptions, lower traffic trends and limited store operating hours. The rising macroeconomic uncertainties and bare minimum revenue prospects have led companies to withdraw their guidance.
What is seen as a temporary blow to revenues and productivity due to the outbreak may have long-term implications. The latest Zacks Earnings Outlook shows that the sector’s bottom line is expected to decline 15.3% year over year during the ongoing earnings season and 8.9% in the current financial year. Companies are taking every step from pay cut to furloughing, from inventory reductions to curb capital expenditures in order improve financial flexibility and preserve cash flow.
No wonder, U.S. retail and food services sales in March fell 8.7% to $483.1 billion. Sales collapsed across a range of categories from Motor vehicles and parts dealers to Furniture & home furnishing stores and from Gasoline stations to Clothing & clothing accessories stores. However, there were still certain groups that recorded decent numbers. These include Health & personal care stores, Food & beverage stores and General merchandise stores. Clearly, people are shopping more of essential items rather making any discretionary purchases.
Moreover, as people are working from home and maintaining social distancing, players in the industry have been focusing on bolstering omni-channel operations and ramping up delivery services to meet customers’ needs. Recently, Tractor Supply Company (TSCO - Free Report) equipped itself to offer same-day delivery of its merchandise by expanding partnership with Roadie. Likewise, a leading food and grocery retailer Casey's (CASY - Free Report) recently expanded partnership with DoorDash to boost delivery capabilities.
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.
4 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 3.7% 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 suggests an improvement of 8.8%.
Another stock worth considering is SpartanNash Company (SPTN - Free Report) , which distributes and retails grocery products. The company’s bottom line has outpaced the Zacks Consensus Estimate in the last reported quarter. The stock has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current financial-year earnings indicates a jump of 26.4%.
Dollar General Corporation (DG - Free Report) , a discount retailer, is a solid bet with a Zacks Rank #2 and a VGM Score of A. The company has a trailing four-quarter positive earnings surprise of 5.9%, on average. It has a long-term earnings growth rate of 12.2%. The Zacks Consensus Estimate for its current financial-year earnings suggests growth of 10.9%.
We also suggest investing in The Kroger Co. (KR - Free Report) with a long-term earnings growth rate of 4.9%. This grocery retailer has a trailing four-quarter positive earnings surprise of 2.1%, on average. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial-year earnings indicates an increase of 12.3%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>