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4 Solid Retail Stocks to Buy on Continued Rise in Sales
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The retail sector has been putting up a great fight amid ongoing inflationary pressures that have seen people spend cautiously. According to the latest data released by the Commerce Department, retail sales rose for the second straight month in May, indicating that people are still willing to spend as demand, despite slowing down, is still elevated.
The report comes as data showed that both consumer price and producer price inflation slowed in May. Slowing inflation finally led the Fed to keep its interest rates unchanged, which is a positive sign for the retail sector. Given this situation, retail stocks are expected to benefit in the near term.
Retail Sales Grow in May
U.S. retail sales grew 0.3% in May after rising 0.4% in April and beating economists’ expectations of a 0.1% decline, the Commerce Department said on Jun 15. On a year-over-year basis, retail sales jumped a solid 1.6% in May.
Except for gasoline stations and other general merchandise retailers, spending increased across almost all categories. Excluding sales at gas stations, retail sales grew at a faster rate of 0.6%.
Online sales rose 0.3%, while sales at food services and drinking places rose 0.4%. Restaurants and bars are the only service category in the monthly sales report.
May’s jump was driven by a 1.4% jump in sales at auto dealers. Sales at retailers of gardening and building products increased 2.2%.
Consumers have cut down on spending over the past several months as higher prices have been pinching their pockets. However, the U.S. economy is holding up well in the face of the Fed’s 500 basis points hike in interest rates over the past year.
The Fed finally decided to keep interest rates unchanged in its recently concluded June policy meeting although it might need to increase interest rates by another 50 basis points by the end of the year.
The Fed’s decision to halt interest rate hikes is definitely a positive sign for the retail sector as this will help boost investor sentiment. This is due to the fact that increasing interest rates may have an impact on stock market performance, consumer spending, and borrowing costs.
The retail sales report comes just days after data showed that inflation slowed in May. The consumer price index (CPI) increased 4% in May, down from April's rise of 4.9%, according to the most recent report from the Bureau of Labor Statistics released on Jun 13. Additionally, the reading for May was slightly below the analysts' projection of 4.1%.
Retail inflation dropped significantly in May, falling to its lowest level since March 2021, mostly due to a sharp drop in fuel costs. The decline in overall inflation has also been aided by groceries prices.
Gas prices fell by roughly 6% in May on a seasonally adjusted basis. In addition, the annual increase in food prices dropped from its peak of 13.5% to 5.8% in May.
Also, producer prices decreased more than expected in May, according to the Producer Price Index (PPI) data released on Jun 14. The PPI has decreased in three of the previous five months, according to the Labor Department, falling 0.3% in May after rising 0.2% in April.
The increase in producer inflation in May was likewise the smallest increase in nearly two and a half years.
Our Choices
Urban Outfitters, Inc. (URBN - Free Report) is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. URBN merchandises are sold directly to consumers through stores, catalogs, call centers and e-commerce platforms. Urban Outfitters has operations in the United States, Canada and Europe.
Urban Outfitters’ expected earnings growth rate for the current year is 57.1%. The Zacks Consensus Estimate for current-year earnings has improved 10.9% over the past 60 days. URBN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The TJX Companies, Inc. (TJX - Free Report) is a leading off-price retailer of apparel and home fashions in the United States and worldwide. TJX’s broad range of assortments at varying prices helps it to reach out to a broad range of consumers. In addition, The TJX Companies tries to attract consumers through a rapid turn of inventories.
The TJX Companies’ expected earnings growth rate for the current year is 14.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. TJX presently has a Zacks Rank #2 (Buy).
Casey's General Stores, Inc. (CASY - Free Report) operates convenience stores under the Casey's and Casey's General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. CASY also operates two stores under the name, "Tobacco City," selling primarily tobacco and nicotine products, one liquor store and one grocery store.
Casey's General Stores’ expected earnings growth rate for next year is 1.7%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. CASY currently carries a Zacks Rank #2.
Abercrombie & Fitch Co. (ANF - Free Report) operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. ANF's product portfolio includes knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids, under the Abercrombie & Fitch, abercrombie kids and Hollister brands.
Abercrombie & Fitch’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 45.5% over the past 60 days. ANF currently sports a Zacks Rank #1.
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4 Solid Retail Stocks to Buy on Continued Rise in Sales
The retail sector has been putting up a great fight amid ongoing inflationary pressures that have seen people spend cautiously. According to the latest data released by the Commerce Department, retail sales rose for the second straight month in May, indicating that people are still willing to spend as demand, despite slowing down, is still elevated.
The report comes as data showed that both consumer price and producer price inflation slowed in May. Slowing inflation finally led the Fed to keep its interest rates unchanged, which is a positive sign for the retail sector. Given this situation, retail stocks are expected to benefit in the near term.
Retail Sales Grow in May
U.S. retail sales grew 0.3% in May after rising 0.4% in April and beating economists’ expectations of a 0.1% decline, the Commerce Department said on Jun 15. On a year-over-year basis, retail sales jumped a solid 1.6% in May.
Except for gasoline stations and other general merchandise retailers, spending increased across almost all categories. Excluding sales at gas stations, retail sales grew at a faster rate of 0.6%.
Online sales rose 0.3%, while sales at food services and drinking places rose 0.4%. Restaurants and bars are the only service category in the monthly sales report.
May’s jump was driven by a 1.4% jump in sales at auto dealers. Sales at retailers of gardening and building products increased 2.2%.
Consumers have cut down on spending over the past several months as higher prices have been pinching their pockets. However, the U.S. economy is holding up well in the face of the Fed’s 500 basis points hike in interest rates over the past year.
The Fed finally decided to keep interest rates unchanged in its recently concluded June policy meeting although it might need to increase interest rates by another 50 basis points by the end of the year.
The Fed’s decision to halt interest rate hikes is definitely a positive sign for the retail sector as this will help boost investor sentiment. This is due to the fact that increasing interest rates may have an impact on stock market performance, consumer spending, and borrowing costs.
The retail sales report comes just days after data showed that inflation slowed in May. The consumer price index (CPI) increased 4% in May, down from April's rise of 4.9%, according to the most recent report from the Bureau of Labor Statistics released on Jun 13. Additionally, the reading for May was slightly below the analysts' projection of 4.1%.
Retail inflation dropped significantly in May, falling to its lowest level since March 2021, mostly due to a sharp drop in fuel costs. The decline in overall inflation has also been aided by groceries prices.
Gas prices fell by roughly 6% in May on a seasonally adjusted basis. In addition, the annual increase in food prices dropped from its peak of 13.5% to 5.8% in May.
Also, producer prices decreased more than expected in May, according to the Producer Price Index (PPI) data released on Jun 14. The PPI has decreased in three of the previous five months, according to the Labor Department, falling 0.3% in May after rising 0.2% in April.
The increase in producer inflation in May was likewise the smallest increase in nearly two and a half years.
Our Choices
Urban Outfitters, Inc. (URBN - Free Report) is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. URBN merchandises are sold directly to consumers through stores, catalogs, call centers and e-commerce platforms. Urban Outfitters has operations in the United States, Canada and Europe.
Urban Outfitters’ expected earnings growth rate for the current year is 57.1%. The Zacks Consensus Estimate for current-year earnings has improved 10.9% over the past 60 days. URBN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The TJX Companies, Inc. (TJX - Free Report) is a leading off-price retailer of apparel and home fashions in the United States and worldwide. TJX’s broad range of assortments at varying prices helps it to reach out to a broad range of consumers. In addition, The TJX Companies tries to attract consumers through a rapid turn of inventories.
The TJX Companies’ expected earnings growth rate for the current year is 14.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. TJX presently has a Zacks Rank #2 (Buy).
Casey's General Stores, Inc. (CASY - Free Report) operates convenience stores under the Casey's and Casey's General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. CASY also operates two stores under the name, "Tobacco City," selling primarily tobacco and nicotine products, one liquor store and one grocery store.
Casey's General Stores’ expected earnings growth rate for next year is 1.7%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. CASY currently carries a Zacks Rank #2.
Abercrombie & Fitch Co. (ANF - Free Report) operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. ANF's product portfolio includes knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids, under the Abercrombie & Fitch, abercrombie kids and Hollister brands.
Abercrombie & Fitch’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 45.5% over the past 60 days. ANF currently sports a Zacks Rank #1.