The global economy is reeling under coronavirus-induced uncertainties since mid-January. The economic devastation has led to the collapse of stock markets and Wall Street is no exception. Although, U.S. stock markets have recovered a large-chunk of the lost ground during the past one and half month, major stock indexes are still far from their all-time highs recorded in mid-February.
Meanwhile, the retail sector turned out one of the worst affected as coronavirus spread across the world. Despite difficulties, a handful of retail stocks with a favorable Zacks Rank, have popped more than 30% in the past month.
Retail Sector Suffers Due to Pandemic
On Apr 15, the Commerce Department stated that U.S. retail and food services sales in March fell 8.7% to $483.1 billion, following a revised reading of 0.4% decline in February. Year over year, retail sales plunged 6.2% in March. The unprecedented fall in March sales marked the largest monthly decline since the time of economic recession in November 2008.
The coronavirus pandemic has brought economic activities to a standstill leading to skyrocketing job losses and massive pay cuts. This has resulted in sinking consumer confidence and dwindling household income, which have severely impacted spending activities and taken a toll on retailers. Notably, consumer spending constitutes 67% of the U.S. GDP.
Prolonged store closures, supply-chain disruptions, lower traffic trends and limited store operating hours in the wake of the pandemic significantly impacted retail businesses. People avoided public places like restaurants, theaters and malls as social distancing became the order of the day.
Not All Retailers Are Pandemic Stricken
As social distancing became the new buzz word, demand for essentials like toilet paper, disinfectants, masks, gloves, packaged water, infant supplies medicines, groceries and related staples started to steadily rise.
As a result of this situation, several retail stores, including supermarkets, grocery chains, medical and pharmacy stores and take-away restaurants are hiring people, refuting several economists and financial experts' warning of massive job cut owing to the COVID-19 outbreak.
Moreover, social distancing has led to higher e-commerce influx. Retailers are witnessing a flurry of orders on account of customers’ unwillingness to visit stores. Give the scenario, rapid deliveries have become the need of the hour.
Players in the industry are focusing on bolstering omni-channel operations and ramping up delivery services to meet needs of customers who are spending more time at home to minimize the risk of infection.
Our Top Picks
We have narrowed down our search to five retail stocks that have gained more than 30% in the past month. Each of these stocks has strong growth potential and witnessed upward earnings estimates revision in the past seven days. These stocks also sport either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Wayfair Inc. (W - Free Report) is one of the world's leading online sellers of home goods products, consisting of furniture and home decor. The Zacks Rank #1 company has an expected earnings growth rate of 34.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 39.3% over the past seven days. The stock has jumped 133.5% in the past month.
1-800-FLOWERS.COM Inc. (FLWS - Free Report) provides gourmet food and floral gifts for various occasions in the United States. It operates in three segments: Consumer Floral, Gourmet Foods & Gift Baskets and BloomNet Wire Service. The Zacks Rank #1 company has an expected earnings growth rate of 19.2% for the current year (ending June 2020). The Zacks Consensus Estimate for current-year earnings has improved by 19.2% over the past seven days. The stock has climbed 57.9% in the past month.
MercadoLibre Inc. (MELI - Free Report) is one of the largest e-commerce platforms in Latin America. The company is a market leader in e-commerce in Brazil, Argentina, Colombia, Chile, Ecuador, Costa Rica, Peru, Mexico, Venezuela and Uruguay based on unique visitors and page views. The Zacks Rank #2 company has an expected earnings growth rate of 62.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 11.4% over the past seven days. The stock has soared 43.9% in the past month.
Sprouts Farmers Market Inc. (SFM - Free Report) is a healthy grocery store that provides fresh, natural and organic food products in the United States. It has a unique model that features fresh produce at the center of the store, an expansive bulk food section and a vitamin department focused on overall wellness. The Zacks Rank #1 company has an expected earnings growth rate of 25.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 12.9% over the past seven days. The stock has surged 41% in the past month.
SpartanNash Co. (SPTN - Free Report) is a food distributor serving military commissaries and exchanges in the United States. It operates in three segments: Food Distribution, Military, and Retail. The Zacks Rank #1 company has an expected earnings growth rate of 26.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 13% over the past 30 days. The stock has gained 30.8% in the past month.
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 >>