Fill Your Holiday Basket With These 5 Retail Stocks

While the word pandemic remains very much in the headlines, retailers are all set to go the extra mile this holiday season to capitalize on any increase in demand. Supply chain bottlenecks, rising transportation costs and labor shortages are issues the industry is currently facing, but retailers are still hoping for a fabulous holiday season. Well, the accumulated savings, the stimulus packages, and the eagerness of consumers to venture out and buy for loved ones should help ring the cash register.

The season, which accounts for a significant portion of annual revenue, is a milestone for retailers. With global supply chains in disarray, retailers are making sure they have enough inventory to meet expected consumer demand. They have even stepped up their hires to ensure they have enough staff before the holiday season begins to handle curb and in-store pickup, online shopping as well as delivery to. residence.

With consumers’ product preferences in mind, retailers are restocking shelves with goods in demand. They increase product visibility on online platforms, improve customer engagement on social channels, improve logistics and offer flexible payment options. Industry players are rapidly adopting the “buy now, pay later” model to attract buyers in an environment of higher retail prices. By Salesforce, global “buy now, pay laterService is expected to account for 8% of online orders this shopping season.

The challenges may persist, but retailers are finding innovative ways to make the most of the season. By SpendingPulse Mastercard, retail sales in the United States – excluding the automobile and gas – for the “75 days of Christmas” which takes place from October 11 to December 24 are expected to increase by 6.8% compared to the previous year. With e-commerce still one of the preferred modes of purchase, Mastercard SpendingPulse predicts an increase in online sales of 7.5% during the aforementioned period.

The survey further predicts a year-over-year increase in sales for a myriad of categories over the “75 Days of Christmas”: 45.4% for clothing, 11.8% for electronics, 60% for jewelry and 92.2% for luxury items (excluding jewelry). Department stores are expected to post sales growth of 14%, according to the report.

That said, we have highlighted five actions of the Wholesale Retail sector that appear to be well positioned on the basis of their strong fundamentals and earnings growth prospects. These stocks are either Zacks # 1 (strong buy) or 2 (buy) rank. You can see The full list of today’s Zacks # 1 Rank stocks here.

Year-to-date price performance

Image source: Zacks Investment Research

5 important choices

Macy’s, Inc. M, one of the nation’s leading omnichannel retailers, is worth the bet. Despite a difficult business landscape, the company has managed to stay afloat, thanks to its Polaris strategy. The strategy includes the rationalization of the store base, the overhaul of the assortments and the prudent management of costs. Notably, customers have responded well to the company’s extensive omnichannel offerings, such as curbside, in-store pickup, and same-day delivery. In this regard, its partnership with DoorDash to expedite delivery service is encouraging. Macy’s has also worked with Klarna, a Swedish buy-it-now and pay-on-payment group, to provide online shoppers with financial ease and payment flexibility. The company is constantly improving its mobile and website features to provide an improved shopping experience. This Zacks No.1 company has a surprise profit over the last four quarters of 269.8% on average. Zacks’ consensus estimate for its current year sales and earnings per share suggests growth of 37.3% and 269.7%, respectively, compared to the prior year period.

Investors can count on Bookmark Jewelers Limited SIG, a renowned jewelry retailer. The company has seen growth in its market share, supported by growth in stores and digital platforms. The cautious efforts undertaken as part of the Inspiring Brilliance strategy have also borne fruit. This strategy focuses on expanding large banners, increasing service revenues, expanding accessible luxury and value segments, and accelerating digital commerce, among others. As part of the Inspiring Brilliance growth strategy, the company uses data-driven insights to target new and existing customers. The company has extended its assortments to its Zales, Kay and Jared brand lines. Impressively, this Zacks No. 1 company has a surprise four-quarter profit of 77.5%, on average. Zacks’ consensus estimate for its current year sales and earnings per share suggests growth of 33% and 329.4%, respectively, from the prior year period.

You can invest in Hibbett, Inc. HIBB, an athletic-inspired fashion retailer. Management expects pent-up demand and compelling merchandise, coupled with superior customer service and a top-notch omnichannel platform, to continue to drive sales and bottom line performance. The company’s focus on in-store and online experience, distribution capabilities and supplier relationships will help drive profitable and sustainable growth. The company expects same-store sales growth in mid-teens for fiscal 2022. This Zacks Rank # 1 company has a surprise four-quarter profit of 124.6%, on average. Zacks’ consensus estimate for its current year sales and earnings per share shows an improvement of 18.3% and 84.6%, respectively, from the prior year period.

We suggest you bet on Best Buy Co., Inc. BBY. This specialty retailer of consumer electronics and related services has seen strong demand across all channels. Continued growth in online revenue, supported by strong omnichannel capabilities and a customer-centric approach, is a key asset. In the second quarter of fiscal 2022, Best Buy recorded strong sales in the domestic and international segments, driven by strong demand for technology products and services. It is on the right track with programs like Total Tech Support, which provides assistance in repairing computers, laptops, home appliances, smart home devices and connected devices. Best Buy has expanded its in-home advisor program which includes advisors who guide customers in choosing the right technology solution. This Zacks Rank # 1 company has a surprise profit over the last four quarters of 31.9%, on average. Zacks’ consensus estimate for its current year sales and earnings per share suggests growth of 9.5% and 26.2%, respectively, from the prior year period.

Wholesale company Costco COST is another potential choice. The company’s growth strategies, better pricing management, decent membership trends and increasing e-commerce penetration contributed to its optimistic performance. Cumulatively, these factors have helped the Issaquah, WA-based company record impressive sales figures. Costco’s net sales rose 15.8% to $ 19.50 billion for the retail month of September – the five-week period ended October 3, 2021 – from $ 16.84 billion the last year. This follows an improvement of 16.2%, 16.6% and 16.9% in August, July and June, respectively. Remarkably, this Zacks Rank # 2 company has an average surprise of 7.7% over the past four quarters. Zacks’ consensus estimate for its current year sales and earnings per share suggests growth of 8.2% and 7.2%, respectively, from the prior year period.

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Macy’s, Inc. (M): Free Stock Analysis Report

Best Buy Co., Inc. (BBY): Free Stock Analysis Report

Costco Wholesale Corporation (COST): Free Inventory Analysis Report

Hibbett, Inc. (HIBB): Free Stock Analysis Report

Signet Jewelers Limited (SIG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Peggy P. Gilmore

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