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4 Retail Stocks to Buy on the Surge in Consumer Confidence
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In a promising development, Americans are now feeling more optimistic about the future, as evidenced by a rise in confidence this July. The Conference Board unveiled that the Consumer Confidence Index rose to 100.3 in July, up from a downwardly revised reading of 97.8 in June. This increase marks a positive shift despite concerns about underlying inflation pressure and a high interest rate environment.
The uptick in consumer confidence highlights cautious yet growing optimism. Short-term expectations for income, business conditions and the labor market were major contributors to this improvement, with the relevant Expectations Index rising to 78.2 from 72.8 in June. However, consumers’ assessment of current conditions saw a slight decline. The Present Situation Index dipped to 133.6 in July from 135.3 in June.
The upswing in consumer sentiment aligns with broader economic indicators, notably the robust 2.8% annualized GDP growth in the second quarter, driven by vigorous consumer and government expenditures. The economy's resilience in the face of challenges showcases the strength of domestic spending.
Looking forward, the trajectory of consumer confidence hinges significantly on inflation trends and the Federal Reserve’s policy. Anticipation is mounting for potential rate adjustments in September, with the current benchmark funds rate being maintained between 5.25% and 5.5%. These policy moves are likely to shape consumer sentiment in the coming months.
The surge in consumer confidence, given that consumer spending fuels a substantial 70% of U.S. economic activity, bodes well for the retail sector and broader economic recovery. As consumers express cautious optimism about future economic conditions, businesses across various sectors may benefit from increased spending and confidence-driven investments.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Abercrombie & Fitch Co. (ANF - Free Report) is a potential pick. By integrating digital and physical retail experiences, Abercrombie & Fitch offers a seamless shopping experience, driving higher customer satisfaction and loyalty. Moreover, strategic marketing initiatives, particularly targeted campaigns in key markets, have been highly effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA and the APAC, provides a solid foundation for global expansion.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 210.3%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings suggests growth of 11.1% and 48.9% from the year-ago period. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. (BURL - Free Report) is worth considering. The company has adeptly responded to the challenges in the retail landscape by strategically emphasizing recognizable brands, implementing the best pricing strategy and targeting trade-down shoppers. The implementation of strategic initiatives aimed at enhancing merchandising capabilities, operational efficiency and store optimization is likely to support revenue growth. By focusing on initiatives such as store relocations and downsizing, Burlington Stores aims to improve store productivity. The ability to quickly respond to evolving market dynamics and adjust inventory levels based on real-time data insights has enabled the company to seize opportunities.
The Zacks Consensus Estimate for Burlington Stores’ current fiscal sales and EPS suggests growth of 9.6% and 25.6%, respectively, from the year-ago reported figure. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 21.7%, on average.
Investors can count on Walmart Inc. (WMT - Free Report) . This omnichannel retail giant has been diligently working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 4.3% and 9.5%, respectively, from the year-ago reported numbers. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 8.3%, on average.
Costco Wholesale Corporation (COST - Free Report) is worth betting on. The discount retailer’s growth strategies, better price management and decent membership trends have been contributing to its performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering decent sales numbers. The company's distinctive membership business model and pricing power set it apart from traditional players. We believe a favorable product mix, steady store traffic, pricing strength and strong liquidity should benefit Costco.
This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 2.3%, on average. The Zacks Consensus Estimate for current financial-year revenues and EPS suggests growth of 5.2% and 10.3%, respectively, from the year-ago reported figures.
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4 Retail Stocks to Buy on the Surge in Consumer Confidence
In a promising development, Americans are now feeling more optimistic about the future, as evidenced by a rise in confidence this July. The Conference Board unveiled that the Consumer Confidence Index rose to 100.3 in July, up from a downwardly revised reading of 97.8 in June. This increase marks a positive shift despite concerns about underlying inflation pressure and a high interest rate environment.
The uptick in consumer confidence highlights cautious yet growing optimism. Short-term expectations for income, business conditions and the labor market were major contributors to this improvement, with the relevant Expectations Index rising to 78.2 from 72.8 in June. However, consumers’ assessment of current conditions saw a slight decline. The Present Situation Index dipped to 133.6 in July from 135.3 in June.
The upswing in consumer sentiment aligns with broader economic indicators, notably the robust 2.8% annualized GDP growth in the second quarter, driven by vigorous consumer and government expenditures. The economy's resilience in the face of challenges showcases the strength of domestic spending.
Looking forward, the trajectory of consumer confidence hinges significantly on inflation trends and the Federal Reserve’s policy. Anticipation is mounting for potential rate adjustments in September, with the current benchmark funds rate being maintained between 5.25% and 5.5%. These policy moves are likely to shape consumer sentiment in the coming months.
The surge in consumer confidence, given that consumer spending fuels a substantial 70% of U.S. economic activity, bodes well for the retail sector and broader economic recovery. As consumers express cautious optimism about future economic conditions, businesses across various sectors may benefit from increased spending and confidence-driven investments.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Abercrombie & Fitch Co. (ANF - Free Report) is a potential pick. By integrating digital and physical retail experiences, Abercrombie & Fitch offers a seamless shopping experience, driving higher customer satisfaction and loyalty. Moreover, strategic marketing initiatives, particularly targeted campaigns in key markets, have been highly effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA and the APAC, provides a solid foundation for global expansion.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 210.3%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings suggests growth of 11.1% and 48.9% from the year-ago period. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. (BURL - Free Report) is worth considering. The company has adeptly responded to the challenges in the retail landscape by strategically emphasizing recognizable brands, implementing the best pricing strategy and targeting trade-down shoppers. The implementation of strategic initiatives aimed at enhancing merchandising capabilities, operational efficiency and store optimization is likely to support revenue growth. By focusing on initiatives such as store relocations and downsizing, Burlington Stores aims to improve store productivity. The ability to quickly respond to evolving market dynamics and adjust inventory levels based on real-time data insights has enabled the company to seize opportunities.
The Zacks Consensus Estimate for Burlington Stores’ current fiscal sales and EPS suggests growth of 9.6% and 25.6%, respectively, from the year-ago reported figure. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 21.7%, on average.
Investors can count on Walmart Inc. (WMT - Free Report) . This omnichannel retail giant has been diligently working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 4.3% and 9.5%, respectively, from the year-ago reported numbers. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 8.3%, on average.
Costco Wholesale Corporation (COST - Free Report) is worth betting on. The discount retailer’s growth strategies, better price management and decent membership trends have been contributing to its performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering decent sales numbers. The company's distinctive membership business model and pricing power set it apart from traditional players. We believe a favorable product mix, steady store traffic, pricing strength and strong liquidity should benefit Costco.
This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 2.3%, on average. The Zacks Consensus Estimate for current financial-year revenues and EPS suggests growth of 5.2% and 10.3%, respectively, from the year-ago reported figures.