3 Stocks to Gain From the Pick Up in Retail Sales
Sales at U.S. retailers came in well above estimates in September, indicating strength among consumers despite higher interest rates and elevated inflation. This calls for investing in retailers such as Carrols Restaurant Group TAST, Casey’s General Stores CASY and Carvana CVNA, which are poised to gain even more.
Retail Sales Increase in September, Beat Expectations
Sales at U.S. retailers rose 0.7% in September, well above analysts’ expectation of a rise of 0.3%, added the Commerce Department. The retail sales figure for August was also revised higher from an increase of 0.6% to 0.8%.
Last month, retail sales rose 3.8% year over year. Sales at retail outlets increased as consumers splurged on discretionary and staple items despite the Federal Reserve’s aggressive monetary policies to tame stubbornly high inflation (read more: 3 Top Stocks to Gain as Inflation is Still Running Hot).
Sales at internet retailers advanced 1.1% last month and are estimated to rise even further in October, banking on another Prime Day promotion by Amazon. Sales at eateries increased 0.9% in September. Similarly, sales increased at personal health care and general merchandise stores.
Receipts at gas stations jumped 0.9% last month, indicating higher pump prices. In reality, core retail sales, which mostly determine the consumer spending component of the GDP, increased by 0.6% in September.
So, what drove retail sales higher? Consumer spending at retail outlets primarily picked up due to strength in the labor market. Job growth was robust in September and average hourly wages improved significantly, which gave consumers the wherewithal to spend.
The Big Gainers
Given the positives, it’s sensible for astute investors to invest in retailers that directly benefit from this promising economic backdrop and an uptick in retail sales.
These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). Such stocks also have a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carrols Restaurant Group is the largest BURGER KING franchisee in the U.S. TAST currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 117.6% over the past 60 days. The company’s expected earnings growth for the current year is 152.9%.
Casey's General Stores operates convenience stores under the Casey's and Casey's General Store names. CASY currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has increased 6.5% over the past 60 days. The company’s expected earnings growth for the next year is 11.6%.
Carvana is a leading e-commerce platform for buying and selling used cars. CVNA currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has increased 30.8% over the past 60 days. The company’s expected earnings growth for the current year is 57.2%.
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Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
Carvana Co. (CVNA) : Free Stock Analysis Report
