4 Must-Have Retail Stocks for Your Holiday Shopping Cart
The holiday season holds immense significance for retailers, constituting a substantial portion of their annual revenues. Consequently, retailers proactively tackle logistical and inventory challenges, devising comprehensive strategies to ensure a seamless shopping experience, both in physical stores and online.
To cater to consumers' product preferences, retailers focus on restocking shelves with high-demand merchandise and significantly invest in digitization. These efforts are expected to lead to the hiring of numerous seasonal associates who will play pivotal roles in managing curbside and in-store pickups of online orders, as well as doorstep deliveries.
However, this holiday season might not be as exuberant as before, given that consumers are adopting a more cautious approach regarding their disposable income. They are grappling with various economic challenges, including inflation, elevated interest rates, the impending return of student loan obligations and depleting savings.
As the once easily spent "discretionary dollar" becomes harder for consumers to part with, retailers must adapt to this evolving landscape. According to Mastercard SpendingPulse, U.S. retail sales, excluding automotive, are expected to increase 3.7% from the previous year during the traditional holiday period spanning from Nov 1 to Dec 24. To put this into context, holiday sales grew 7.6% last year.
That said, we have highlighted four stocks from the Retail - Wholesale sector that look well-positioned based on their sound fundamentals.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Urban Outfitters URBN is worth betting on. This leading lifestyle product and services company seems a promising bet due to its solid business strategies and sound fundamentals. Management has been strengthening its direct-to-consumer business, enhancing productivity across existing channels and optimizing inventory levels. URBN’s strategic growth initiative, FP Movement and store-growth endeavors are also impressive.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal sales and EPS suggests growth of 6.6% and 83.4%, respectively, from the year-ago reported figure. URBN has a trailing four-quarter earnings surprise of 19.2%, on average. This Zacks Rank #1 (Strong Buy) company has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Investors can count on Ross Stores ROST. The store expansion strategy, combined with the company's strong brand reputation and off-price retail model, positions Ross Stores for success in the dynamic retail landscape. The company has ambitious goals, aiming to reach at least 2,900 Ross Dress for Less and 700 dd's DISCOUNTS locations over time. By expanding its store network, the company strengthens brand visibility, captures new customer segments and unlocks potential sales growth.
This operator of off-price retail apparel and home fashion stores delivered a trailing four-quarter earnings surprise of 11.4%, on average. The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and EPS suggests growth of 7.1% and 19.4%, respectively, from the year-ago period. ROST, which presently sports a Zacks Rank #1, has a VGM Score of B.
Walmart WMT is another potential pick. The omnichannel retail giant has been diligently working to further strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment.
This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 11.6%, on average. The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 5% and 2.2%, respectively, from the year-ago reported numbers. The company has a VGM Score of A.
Boot Barn Holdings BOOT is also worth considering. This lifestyle retailer of western and work-related footwear, apparel and accessories has been successfully navigating through the challenging environment with merchandising strategies, omnichannel capabilities and better expense management, as well as marketing. These, combined with the expansion of the store base, have helped Boot Barn Holdings gain market share and strengthen its position in the industry.
The Zacks Consensus Estimate for Boot Barn Holdings’ current fiscal sales suggests growth of 7.8%, respectively, from the year-ago reported figure. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 13.5%, on average, with a VGM Score of A.
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Walmart Inc. (WMT) : Free Stock Analysis Report
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report
