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Add These 4 S&P 500 Retail Stocks for a Standout Portfolio

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The economy has changed drastically so far this year. Starting on an upbeat note, the year took a nasty turn with the novel coronavirus bringing the economy to a standstill. In fact, the S&P 500 index fell around 30% earlier this year. The index dropped to as low as 2,191.86 on Mar 23, before closing at 2,237.40. Since then, the index has surged more than 40% and is steadily heading toward a 52-week high of 3,393.52, courtesy of the pouring in of some positive news.

Undoubtedly, this catastrophe has severely impacted industries across the board. It comes as no surprise that the virus has already taken a toll on employment and household income. As a result, consumer spending activity, which remains one of the pivotal factors driving the economy, has taken a hit. Policy makers have been frantically working toward urgent repairs. Meanwhile, President Trump signed a stimulus package aimed at helping workers, small industries and distressed companies on the brink of bankruptcy.

Apparently, measures undertaken to support households, firms and financial market coupled with the resumption of commercial and industrial activities post the coronavirus lockdown have ushered in some good news for the market. In fact, the news of gradual reopening of the economy provided a boost of confidence to investors. Again, the stunning addition of 2.5-million jobs in May and the dropping of unemployment rate to 13.3% from 14.7% were other reasons behind those green shoots in the market.

Meanwhile, in the recent two-day meeting, the Federal Reserve decided to keep the benchmark interest rate near zero until at least 2022, given the economy is still struggling for recovery. Also, the Fed expects unemployment rate to fall to 9.3% by the end of 2020 and to 6.5% by the end of 2021. On the economy front, it expects GDP to shrink 6.5% in the current year but expand 5% next year.

Clearly, the optimism surrounding the economic recovery will help keep the momentum alive in the S&P 500, at least in the near term. Moreover, with the gradual reopening of businesses and people back on streets, there is possibility of an uptick in consumer spending.

Certainly, the Retail – Wholesale sector is likely to witness a sharp rebound. As social distancing has become the norm of the day, industry participants will be playing dual in-store and online roles. Initiatives such as building omni-channel, enhancing supply chain and providing faster delivery options, be it curbside pickup or delivery at home, are worth mentioning.

Here we have shortlisted four Retail-Wholesale stocks on the basis of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. These stocks not only boast sound fundamentals but have also outperformed the sector as well as the S&P 500 index on a year-to-date basis. Notably, the sector has risen 13.2%, while the index has fallen a meager 1% so far in the year.



 

4 Prominent Picks

eBay Inc. (EBAY - Free Report) , which operates the marketplace and classifieds platforms that connect buyers and sellers globally, is a solid bet with a Zacks Rank #1 and a VGM Score of B. The company has a trailing four-quarter positive earnings surprise of 6.2%, on average. It has a long-term earnings growth rate of 12.8%. The Zacks Consensus Estimate for its current financial year earnings has improved 10% in the past 30 days. Moreover, the stock has rallied 36.4% so far in the year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors can count on Domino's Pizza, Inc. (DPZ - Free Report) , with a long-term earnings growth rate of 12.8%. This pizza company has a trailing four-quarter positive earnings surprise of 12.7%, on average. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial-year earnings has increased 3.6% in the past 30 days. Notably, the stock has surged 33.6% year to date.

We also suggest investing in Tractor Supply Company (TSCO - Free Report) , which has a long-term earnings growth rate of 12%. This operator of rural lifestyle retail stores reported a positive earnings surprise in the last reported quarter. The stock has a Zacks Rank #2 and a VGM Score of B. Moreover, the Zacks Consensus Estimate for its current financial year earnings has moved up 16.3% in the past 30 days. The stock has advanced 29.8% so far in the year.

Dollar General Corporation (DG - Free Report) , a discount retailer, is also worth betting with a Zacks Rank #2 and a VGM Score of A. The company has a trailing four-quarter positive earnings surprise of 16.9%, on average. It has a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for its current financial year earnings has risen 8.6% in the past 30 days. Moreover, the stock has rallied 21.9% year to date.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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