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Retail is Staging a Big Comeback in 2018: 5 Solid Buys
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A slew of traditional retailers and department store chains filed for bankruptcy this year, as they were affected by changing customer habits, price wars and consumers’ inclination towards online shopping.
However, record end-of-year holiday season sales have given them a shot in the arm as Americans continue to feel optimistic about their financial wealth as a result of strengthening economy and a stable labor market. Such buoyancy will further drive retailers in the upcoming year. This calls for investors to double down on the hottest retailers right away.
2017 – A Tough Year for Retailers
The traditional retail industry witnessed one of its most difficult years, with store closing announcements touching a record 7,000, per retail think tank Fung Global Retail and Technology. So far in 2017, about 662 retailers have filed for bankruptcy, up 30% from the same period last year, according to BankruptcyData.com. While most bankrupt retailers were small mom-and-pop stores, major retailers on the list included Toys R Us, Payless Shoes, Gymboree and Rue21. In fact, The Limited closed down and RadioShack shut almost all of its remaining stores. Understandably, this is because shoppers have made it clear that they want to do shopping on their smartphones instead of hitting traditional brick-and-mortar stores.
However, experts did say not to count on it, as they believe that the demise of traditional retailing is overblown. After all, store openings also increased this year compared with last year, as per Fung. Lest we forget that two bargain brands Dollar Tree (DLTR - Free Report) and Dollar General (DG - Free Report) , recently, announced their store opening plans. Tom McGee, CEO of the International Council of Shopping Centers, a trade group of mall owners, said that occupancy rate at the nation’s malls have escalated about 93% this year.
Retailers Saw Best Holiday Season Sales Since 2011
Retailers are also witnessing plenty of green this holiday season. Total retail sales jumped 4.9% compared with the same period last year. This turned out to be the largest year-over-year uptick since 2011, according to Mastercard SpendingPulse report released on Dec 26.
Some of the largest jumps were seen in electronics and appliances. The segment climbed 7.5% and registered the strongest growth in the last 10 years. Home furniture and furnishings grew 5.1% and so did home improvement. Department stores and specialty apparel saw moderate gains, which is quite encouraging given the recent store closings. The jewelry segment also gained 5.9%, primarily driven by last-minute sales.
The strong economy was a contributing factor but a pretty low unemployment rate encouraged investors even more to spend this holiday season. Moreover, consumers continue to feel confident and optimistic about spending this year and beyond.
Jobless Rate at Record Low, Consumer Confidence Steady
The unemployment rate was at 4.1% in November and continues to remain at a 17-year low. The U6 unemployment rate was 8% last month, up from 7.9% in the prior month. But, the broadest measure of unemployment and underemployment remained near the lowest since 2006.
U.S. employers also added 228,000 jobs in November, steering past expectations of 200,000. In fact, job additions in the U.S. economy topped the 200,000 mark for the second straight month, reflecting a bounce back after hurricanes in Texas and Florida affected hiring in September (read more: 4 Best Staffing Stocks to Buy on Blockbuster Jobs Report).
A key measure of U.S. consumer sentiment slipped for the second straight month in December but continued to show an uptick in household confidence during the holiday shopping period. The University of Michigan’s survey of consumer attitudes came in at 95.9 in early December, down from 98.5 in November. However, Richard Curtin, Michigan survey’s chief economist, said that on an average, consumer sentiment this year was the highest since 2000.
2018 Could be Retail’s Big Comeback Year: 5 Must Buys
Given the aforesaid positives, investing in sound retail stocks seems judicious. We have thus selected five such retailers to boost your returns. Such stocks also possess a Zacks Rank #2 (Buy). The favorable Zacks Rank should help these stocks gain further the next year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Conn’s, Inc. (CONN - Free Report) operates as a specialty retailer of durable consumer goods and related services in the United States. Currently, the company has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current year earnings has soared 35.4% over the last 60 days. Conn’s expected growth rate for the current year is 501.5%, way higher than the industry’s estimated return of 2.7%. The stocks expected earnings growth for 2018 is 124.5%.
RH (RH - Free Report) operates as a retailer in the home furnishings market. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current year earnings has jumped 12.3% over the last 60 days. RH’s expected growth rate for the current year is 132.1% against the industry’s projected negative return of 6.9%. For 2018, the expected earnings growth is 73.4%.
At Home Group Inc. operates home decor superstores in the United States. Currently, the company has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current year earnings has soared 5.3% over the last 60 days. The company’s expected growth rate for the current year is 34.6% against the industry’s projected negative return of 6.9%. The expected earnings growth for 2018 is 26.2%.
Movado Group, Inc. (MOV - Free Report) designs, develops, sources, markets, and distributes fine watches in the United States and internationally. Recently, the company has a Zacks Rank #1. The Zacks Consensus Estimate for its current year earnings has gained 7.4% over the last 60 days. Movado’s expected growth rate for the current year is 9.1%, higher than the industry’s estimated return of 7.5%. The expected earnings growth for 2018 is 7.2%.
Wal-Mart Stores, Inc. (WMT - Free Report) operates retail stores in various formats worldwide. It operates through three segments: Walmart U.S., Walmart International, and Sams Club. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current year earnings has increased 1.1% over the last 60 days. The company’s expected growth rate for the current year is 2.5% against the industry’s projected negative return of 2.2%. For 2018, the expected earnings growth is 5.9%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Retail is Staging a Big Comeback in 2018: 5 Solid Buys
A slew of traditional retailers and department store chains filed for bankruptcy this year, as they were affected by changing customer habits, price wars and consumers’ inclination towards online shopping.
However, record end-of-year holiday season sales have given them a shot in the arm as Americans continue to feel optimistic about their financial wealth as a result of strengthening economy and a stable labor market. Such buoyancy will further drive retailers in the upcoming year. This calls for investors to double down on the hottest retailers right away.
2017 – A Tough Year for Retailers
The traditional retail industry witnessed one of its most difficult years, with store closing announcements touching a record 7,000, per retail think tank Fung Global Retail and Technology. So far in 2017, about 662 retailers have filed for bankruptcy, up 30% from the same period last year, according to BankruptcyData.com. While most bankrupt retailers were small mom-and-pop stores, major retailers on the list included Toys R Us, Payless Shoes, Gymboree and Rue21. In fact, The Limited closed down and RadioShack shut almost all of its remaining stores. Understandably, this is because shoppers have made it clear that they want to do shopping on their smartphones instead of hitting traditional brick-and-mortar stores.
However, experts did say not to count on it, as they believe that the demise of traditional retailing is overblown. After all, store openings also increased this year compared with last year, as per Fung. Lest we forget that two bargain brands Dollar Tree (DLTR - Free Report) and Dollar General (DG - Free Report) , recently, announced their store opening plans. Tom McGee, CEO of the International Council of Shopping Centers, a trade group of mall owners, said that occupancy rate at the nation’s malls have escalated about 93% this year.
Retailers Saw Best Holiday Season Sales Since 2011
Retailers are also witnessing plenty of green this holiday season. Total retail sales jumped 4.9% compared with the same period last year. This turned out to be the largest year-over-year uptick since 2011, according to Mastercard SpendingPulse report released on Dec 26.
Some of the largest jumps were seen in electronics and appliances. The segment climbed 7.5% and registered the strongest growth in the last 10 years. Home furniture and furnishings grew 5.1% and so did home improvement. Department stores and specialty apparel saw moderate gains, which is quite encouraging given the recent store closings. The jewelry segment also gained 5.9%, primarily driven by last-minute sales.
The strong economy was a contributing factor but a pretty low unemployment rate encouraged investors even more to spend this holiday season. Moreover, consumers continue to feel confident and optimistic about spending this year and beyond.
Jobless Rate at Record Low, Consumer Confidence Steady
The unemployment rate was at 4.1% in November and continues to remain at a 17-year low. The U6 unemployment rate was 8% last month, up from 7.9% in the prior month. But, the broadest measure of unemployment and underemployment remained near the lowest since 2006.
U.S. employers also added 228,000 jobs in November, steering past expectations of 200,000. In fact, job additions in the U.S. economy topped the 200,000 mark for the second straight month, reflecting a bounce back after hurricanes in Texas and Florida affected hiring in September (read more: 4 Best Staffing Stocks to Buy on Blockbuster Jobs Report).
A key measure of U.S. consumer sentiment slipped for the second straight month in December but continued to show an uptick in household confidence during the holiday shopping period. The University of Michigan’s survey of consumer attitudes came in at 95.9 in early December, down from 98.5 in November. However, Richard Curtin, Michigan survey’s chief economist, said that on an average, consumer sentiment this year was the highest since 2000.
2018 Could be Retail’s Big Comeback Year: 5 Must Buys
Given the aforesaid positives, investing in sound retail stocks seems judicious. We have thus selected five such retailers to boost your returns. Such stocks also possess a Zacks Rank #2 (Buy). The favorable Zacks Rank should help these stocks gain further the next year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Conn’s, Inc. (CONN - Free Report) operates as a specialty retailer of durable consumer goods and related services in the United States. Currently, the company has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current year earnings has soared 35.4% over the last 60 days. Conn’s expected growth rate for the current year is 501.5%, way higher than the industry’s estimated return of 2.7%. The stocks expected earnings growth for 2018 is 124.5%.
(Looking for the Best Stocks for 2018? Be among the first to see our Top Ten Stocks for 2018 portfolio here.)
RH (RH - Free Report) operates as a retailer in the home furnishings market. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current year earnings has jumped 12.3% over the last 60 days. RH’s expected growth rate for the current year is 132.1% against the industry’s projected negative return of 6.9%. For 2018, the expected earnings growth is 73.4%.
At Home Group Inc. operates home decor superstores in the United States. Currently, the company has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current year earnings has soared 5.3% over the last 60 days. The company’s expected growth rate for the current year is 34.6% against the industry’s projected negative return of 6.9%. The expected earnings growth for 2018 is 26.2%.
Movado Group, Inc. (MOV - Free Report) designs, develops, sources, markets, and distributes fine watches in the United States and internationally. Recently, the company has a Zacks Rank #1. The Zacks Consensus Estimate for its current year earnings has gained 7.4% over the last 60 days. Movado’s expected growth rate for the current year is 9.1%, higher than the industry’s estimated return of 7.5%. The expected earnings growth for 2018 is 7.2%.
Wal-Mart Stores, Inc. (WMT - Free Report) operates retail stores in various formats worldwide. It operates through three segments: Walmart U.S., Walmart International, and Sams Club. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current year earnings has increased 1.1% over the last 60 days. The company’s expected growth rate for the current year is 2.5% against the industry’s projected negative return of 2.2%. For 2018, the expected earnings growth is 5.9%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>