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Craft a Standout Portfolio for 2019 With These 5 Retail Stocks

Zacks Equity Research
Regency Centers (REG) will gain from premium grocery-anchored shopping centers, and focus on necessity, value, convenience and service-oriented retailers will help it navigate the retail market blues.

Santa Claus finally arrived on Wall Street on Wednesday for investors with all three major indices staging an astounding comeback from the bearish territory. Lately, the market got upset from the partial government shutdown, President’s comment over the Fed Chairman and other geopolitical tensions. However, recent positive remarks from the White House, recovery in oil prices and the news that holiday retail sales rose at their best pace in six years provided a much-needed boost.

Major indices like the S&P 500, NASDAQ and Dow Jones Industrial Average gained 5%, 5.8% and 5%, respectively, on Dec 26. We note that apart from Tech and Energy stocks, Retail and Consumer stocks also made their way to the list of best performers. Notably, SPDR S&P Retail ETF and Consumer Discretionary Select Sector SPDR Fund rose 5.7% and 5.9%, respectively, yesterday.

Retail stocks rose following a report from Mastercard SpendingPulse that stated sales from Nov 1 through Dec 24 increased 5.1% to more than $850 billion. Meanwhile, online sales surged 19.1% during the aforementioned period. Rise in sales not only add to the holiday euphoria but also provide an opportune time to invest in retail stocks for 2019.

Per the latest Earnings Preview the Zacks Retail-Wholesale sector is likely to register top and bottom line growth of 5.7% and 9.5%, respectively, in the next financial year. The sector typically performs well in a maturing economic cycle. Improving labor market, rising disposable income and elevated consumer sentiment have ushered confidence in retailers.

Having said that we believe the sector offers lucrative opportunities for investors. Here we have highlighted five Retail-Wholesale stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.

5 Prominent Picks

Investors can count on Fossil Group, Inc. FOSL, which designs, develops, markets and distributes consumer fashion accessories. This Zacks Rank #1 company’s bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for 2019 has surged 58.8% to $1.54 over the past 60 days and reflects a sharp year-over-year improvement of roughly 49%.

RH RH, a home furnishing retailer, is a solid bet with a long-term earnings growth rate of 17.5%. This Zacks Rank #1 company has delivered average positive earnings surprise of 23.5% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for fiscal 2019 has improved 15% to $9.49 over the past 30 days and reflects year-over-year growth of 13.1%.

You can also consider Office Depot, Inc. ODP, an office supply retailing company. This Zacks Rank #2 company has delivered average positive earnings surprise of 11.9% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for 2019 has risen by a couple of cents to 39 cents over the past 60 days and reflects year-over-year growth of 18.2%.

Urban Outfitters, Inc. URBN, a lifestyle products and services company, is another lucrative option. The stock has a long-term earnings growth rate of 11.2%. This Zacks Rank #2 company has delivered average positive earnings surprise of 14.5% in the trailing four quarters. Moreover, the Zacks Consensus Estimate of earnings for the next financial year has increased by 4 cents to $2.93 over the past 60 days and reflects year-over-year growth of 7.3%.

We also suggest investing in Darden Restaurants, Inc. DRI, which owns and operates full-service restaurants. This Zacks Rank #2 company has a long-term earnings growth rate of 9.7%. Moreover, the Zacks Consensus Estimate of earnings for the next financial year has risen by 5 cents to $6.26, reflecting year-over-year increase of 10.5%.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>


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Fossil Group, Inc. (FOSL) : Free Stock Analysis Report
 
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
 
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
 
Restoration Hardware Holdings Inc. (RH) : Free Stock Analysis Report
 
Office Depot, Inc. (ODP) : Free Stock Analysis Report
 
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