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4 Retail Value Bets to Shrug Off Coronavirus-Induced Volatility

Rashmi Jaiswal
·4 mins read

COVID-19 has been putting billions of lives in danger. The biological hazard has also roiled the global economy, with stock markets experiencing turbulence. Likewise, the U.S. economy has been on a roller-coaster ride so far this year. The fiscal year began on a bright note but the deadly virus disrupted business activities, thus bring the economy to a lurching halt.

However, every cloud has a silver lining and so does each market gyration. As the U.S. economy is opening in phases with easing of restrictions, equity markets are exhibiting strength. A better-than-anticipated report on the U.S. services sector, rising consumer confidence and a drop in the unemployment rate are some of the green shoots.

Despite the devastating virus impacts, the Dow Jones, the tech-led Nasdaq and the S&P 500 have appreciated 14.3%, 32.3% and 19.6%, respectively, over the past three months. Also, Wall Street put up its best performance in second-quarter 2020 in over two decades. Clearly, hopes of an economic revival supported by stimulus measures should steer the market ahead.

Why Value Investing?

Without doubt, this outbreak has severely impacted several industries, taking a toll on employment and household income. Nonetheless, measures undertaken to support households, firms and financial market have provided the much-needed impetus. Well, we still don’t know for how long we will have to battle with COVID-19. So let’s see what strategy investors should apply in order to keep their portfolio unaffected.

Investment in stocks made on diligent value analysis is usually considered one of the best practices. In value investing, investors pick stocks that are cheap but fundamentally sound. At this stage, investors should be prepared to minimize fluctuations in their portfolio and rebalance it with suitable stocks to maintain stability.

That said, we have zeroed in on four value stocks in the retail space that are worth buying. Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) when combined with a Value Score of A or B have better potential. You can see the complete list of today’s Zacks #1 Rank stocks here. These stocks have also outperformed the broader S&P 500 Index’s 7.2% rally and the Retail-Wholesale sector’s 24.5% increase over the course of a year.



4 Value Picks

Renowned grocery retailer, The Kroger Co. KR, which belongs to the Zacks Retail – Supermarkets industry has appreciated 55.1% in the past year. It has an average trailing four-quarter positive earnings surprise of 4% and a long-term earnings growth rate of 5.5%. Moreover, the Zacks Consensus Estimate for its current financial year earnings is pegged at $2.83, which suggests 28.6% year-over-year growth. Kroger has a price-to-earnings ratio of 11.9 compared with that of the industry’s 18.56. The stock has a Zacks Rank #1 and a Value Score of A.

Next, we have SpartanNash Company SPTN from the Zacks Food - Natural Foods Products industry. This grocery products’ company has displayed a bullish run on the bourses, gaining 87.6% in a year. The retailer delivered an average positive earnings surprise of 17.1% in the trailing four quarters. Moreover, the Zacks Consensus Estimate for its current financial year earnings stands at $2.01, hinting at 82.7% growth year over year. SpartanNash has a price-to-earnings ratio of 10.4 compared with 15.34 for the industry. The Zacks Rank #1 stock has a Value Score of A.

Big Lots, Inc. BIG, which forms part of the Zacks Retail - Discount Stores industry, has surged 50.7% year to date. It delivered an average four-quarter positive earnings surprise of 62.2% and has a long-term earnings growth rate of 7.1%. The Zacks Consensus Estimate for the company’s current-year earnings is $6.1, suggesting year-over-year improvement of 66.2%. Big Lots has a price-to-earnings ratio of 6.57 compared with 24.06 for the industry. This Zacks Rank #1 (Strong Buy) company possesses a Value Score of A.

Finally, we have MarineMax, Inc. HZO from the Zacks Retail – Miscellaneous industry. This recreational boat and yacht retailer has delivered an average four-quarter positive earnings surprise of 189.9%. The Zacks Consensus Estimate for its current-financial-year earnings is pegged at $1.52. MarineMax has a price-to-earnings ratio of 13.9 compared with 15.87 for the industry. The Zacks Rank #1 stock with a Value Score of B has surged 36.3% in a year.

5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>


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Big Lots, Inc. (BIG) : Free Stock Analysis Report
 
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