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Fed Rate Cuts to Boost Retail Sector: 4 Stocks With Most Upside
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The retail sector is staging a solid comeback as inflationary pressures ease. The sector struggled for months, crippled by sky-high inflation and higher borrowing costs. The jump in August retail sales proves that the U.S. economy is on solid ground.
The retail sector is expected to get a further boost as the Fed gears up to announce its rate cut today, the first since March 2020. Given this scenario, investing in retail stocks would be a prudent choice.
We have narrowed our search to four retail stocks such as Boot Barn Holdings, Inc. (BOOT - Free Report) , JD.com, Inc. (JD - Free Report) , Chewy, Inc. (CHWY - Free Report) and Abercrombie & Fitch (ANF - Free Report) ,with strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Retail Sales Jump in August
The Commerce Department said on Tuesday that retail sales rose 0.1% in August after rising the most in 18 months in July and beating analysts’ expectations of a decline of 0.2%. In July, retail sales rose 1.1%.
Year over year, retail sales grew 2.1% in August. Online retail sales made a solid rebound, increasing 1.4% in August after declining 0.4% in the previous month.
Sales at stores specializing in sporting goods, hobbies, musical instruments, and books rose by 0.3%. Sales at building material and garden equipment stores increased 0.1%. Miscellaneous retailers’ sales jumped 1.7%.
The latest data indicates that consumers are still spending at an aggressive pace as inflation continues to cool. Also, the average paychecks have risen substantially since the COVID-19 outbreak, which has been helping Americans spend despite the increase in prices of several necessities.
Fed Rate Cut to Boost Retail Stocks
Signs of cooling inflation have convinced the Federal Reserve to finally go ahead with its rate cut plans. The retail sale report came as the Federal Reserve began its two-day policy meeting. The financial community is hopeful that the Fed will go for its first rate cut in more than four years.
Also, the U.S. economy is on solid ground. The U.S. GDP grew 3% in the second quarter after growth slowed to 1.4% in the first quarter. The Atlanta Fed upwardly revised its third-quarter GDP growth estimate to an annual rate of 3% from the earlier projected 2.5% pace after the release of the retail sales data.
Presently, the CME FedWatch tool shows a 63% probability of a 25-basis point cut this week, while a 37% chance of a 50-basis point cut. Even if the Fed goes for a small rate cut, it bodes well for the broader economy. The retail sector is expected to get a boost as lower borrowing costs will allow consumers to spend freely.
Retail Stocks Set to Gain:
Boot Barn Holdings, Inc.
Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. BOOT’s products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce Website.
Boot Barn Holdings’ expected earnings growth rate for the current year is 10.7%. The Zacks Consensus Estimate for current-year earnings has improved 11.4% over the past 60 days. Boot Barn Holdings currently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
JD.com, Inc.
JD.com, Inc. operates as an online direct sales company in China. JD, through its website www.jd.com, and mobile applications, offers a selection of authentic products.
JD.com’s expected earnings growth rate for the current year is 27.2%. The Zacks Consensus Estimate for current-year earnings has improved 16.8% over the past 60 days. JD currently carries a Zacks Rank #1.
Image Source: Zacks Investment Research
Chewy, Inc.
Chewy, Inc. operates as an online pet retailer. CHWY offers pet products that include dry and wet food, toys, mats, biscuits, vitamins and supplements.
CHWY’s expected earnings growth rate for the current year is 65.2%. The Zacks Consensus Estimate for current-year earnings has improved 34.1% over the past 60 days. CHWY currently has a Zacks Rank #2.
Image Source: Zacks Investment Research
Abercrombie & Fitch
Abercrombie & Fitch 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 63.4%. The Zacks Consensus Estimate for current-year earnings has improved 10.9% over the past 60 days. ANF currently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
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Fed Rate Cuts to Boost Retail Sector: 4 Stocks With Most Upside
The retail sector is staging a solid comeback as inflationary pressures ease. The sector struggled for months, crippled by sky-high inflation and higher borrowing costs. The jump in August retail sales proves that the U.S. economy is on solid ground.
The retail sector is expected to get a further boost as the Fed gears up to announce its rate cut today, the first since March 2020. Given this scenario, investing in retail stocks would be a prudent choice.
We have narrowed our search to four retail stocks such as Boot Barn Holdings, Inc. (BOOT - Free Report) , JD.com, Inc. (JD - Free Report) , Chewy, Inc. (CHWY - Free Report) and Abercrombie & Fitch (ANF - Free Report) ,with strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Retail Sales Jump in August
The Commerce Department said on Tuesday that retail sales rose 0.1% in August after rising the most in 18 months in July and beating analysts’ expectations of a decline of 0.2%. In July, retail sales rose 1.1%.
Year over year, retail sales grew 2.1% in August. Online retail sales made a solid rebound, increasing 1.4% in August after declining 0.4% in the previous month.
Sales at stores specializing in sporting goods, hobbies, musical instruments, and books rose by 0.3%. Sales at building material and garden equipment stores increased 0.1%. Miscellaneous retailers’ sales jumped 1.7%.
The latest data indicates that consumers are still spending at an aggressive pace as inflation continues to cool. Also, the average paychecks have risen substantially since the COVID-19 outbreak, which has been helping Americans spend despite the increase in prices of several necessities.
Fed Rate Cut to Boost Retail Stocks
Signs of cooling inflation have convinced the Federal Reserve to finally go ahead with its rate cut plans. The retail sale report came as the Federal Reserve began its two-day policy meeting. The financial community is hopeful that the Fed will go for its first rate cut in more than four years.
Also, the U.S. economy is on solid ground. The U.S. GDP grew 3% in the second quarter after growth slowed to 1.4% in the first quarter. The Atlanta Fed upwardly revised its third-quarter GDP growth estimate to an annual rate of 3% from the earlier projected 2.5% pace after the release of the retail sales data.
Presently, the CME FedWatch tool shows a 63% probability of a 25-basis point cut this week, while a 37% chance of a 50-basis point cut. Even if the Fed goes for a small rate cut, it bodes well for the broader economy. The retail sector is expected to get a boost as lower borrowing costs will allow consumers to spend freely.
Retail Stocks Set to Gain:
Boot Barn Holdings, Inc.
Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. BOOT’s products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce Website.
Boot Barn Holdings’ expected earnings growth rate for the current year is 10.7%. The Zacks Consensus Estimate for current-year earnings has improved 11.4% over the past 60 days. Boot Barn Holdings currently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
JD.com, Inc.
JD.com, Inc. operates as an online direct sales company in China. JD, through its website www.jd.com, and mobile applications, offers a selection of authentic products.
JD.com’s expected earnings growth rate for the current year is 27.2%. The Zacks Consensus Estimate for current-year earnings has improved 16.8% over the past 60 days. JD currently carries a Zacks Rank #1.
Image Source: Zacks Investment Research
Chewy, Inc.
Chewy, Inc. operates as an online pet retailer. CHWY offers pet products that include dry and wet food, toys, mats, biscuits, vitamins and supplements.
CHWY’s expected earnings growth rate for the current year is 65.2%. The Zacks Consensus Estimate for current-year earnings has improved 34.1% over the past 60 days. CHWY currently has a Zacks Rank #2.
Image Source: Zacks Investment Research
Abercrombie & Fitch
Abercrombie & Fitch 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 63.4%. The Zacks Consensus Estimate for current-year earnings has improved 10.9% over the past 60 days. ANF currently sports a Zacks Rank #1.
Image Source: Zacks Investment Research