E-Commerce Continues to Boost Retail Sales: 5 Stocks to Buy
The retail sector is gradually bouncing back to the pre-pandemic levels as more people are getting vaccinated and restrictions continue to be eased. More people have been visiting restaurants and bars and buying apparel, which saw retail sales jump in June, according to the latest Mastercard SpendingPulse report.
The surge in sales was driven by e-commerce as people preferred shopping form home. This was what helped the sector to recover from the battering it took last year when the pandemic had just struck.
Retail Sales Increase in June
According to the latest Mastercard SpendingPulse report, retail sales grew 11% year over year in June and 10.4% from June 2019. This is the ninth consecutive month of growth in retail sales.
Sales grew across all segments, led by restaurants, apparel and departmental stores. Sales at restaurants jumped 55% year over year. This is because sales had come to a standstill last year around this time when the coronavirus was at its peak and businesses had to be shut down.
The same reason saw sales growing a whopping 67.4% at departmental stores on a year-over-year basis, while apparel sales jumped 62.9%. People have also been spending more lately which is helping the retail sector.
E-Commerce Drive Retail Sales
E-commerce has been playing an important role in helping the retail sector to bounce from the pandemic lows. Although the concept has been in the United States for years now, not too many believed in shopping online. According to the Mastercard SpendingPulse, e-commerce sales grew 8.3% year over year in June 2021 but more importantly it jumped 95% from 2019.
Another reason behind the surge in retail sales is the additional spending power thanks to the new round of stimulus checks that has given people the confidence to spend more. Also, more people are getting vaccinated, which is making them feel safer now.
Our Choices
Even as people step out of their homes, online shopping will continue to be a safe bet for millions given its safety and convenience. This is thus the right opportunity to invest in retail stocks that have a strong online presence.
Target Corporation TGT has evolved from being just a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.
The company’s expected earnings growth rate for the current year is 28.5%. The Zacks Consensus Estimate for current-year earnings has improved 39.6% over the past 60 days. Target sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
L Brands, Inc. LB evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products.
The company’s expected earnings growth rate for the current year is 67.3%. The Zacks Consensus Estimate for current-year earnings has improved 25.9% over the past 60 days. L Brands has a Zacks Rank #2 (Buy).
Walmart Inc. WMT has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. In this regard, the acquisitions of Bonobos, Moosejaw and Parcel; partnership with Shopify and Goldman Sachs; delivery programs like Walmart + and Express Delivery; and investment in online e-commerce platform Flipkart are noteworthy.
The company’s expected earnings growth rate for the current year is 8.6%. The Zacks Consensus Estimate for current-year earnings has improved 9.8% over the past 60 days. Walmart has a Zacks Rank #2.
Costco Wholesale Corporation COST sells high volumes of food and general merchandise, including household products and appliances, at discounted prices through membership warehouses.
The company’s expected earnings growth rate for the current year is 17.9%.The Zacks Consensus Estimate for the current year earnings has improved 7.3% over the past 60 days. Costco carries a Zacks Rank #2.
Best Buy Co., Inc. BBY is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services.
The company’s expected earnings growth rate for next year is 7.8%. The Zacks Consensus Estimate for current-year earnings has improved 17% over the past 60 days. Best Buy has a Zacks Rank #1.
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Target Corporation (TGT) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
Best Buy Co., Inc. (BBY) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
L Brands, Inc. (LB) : Free Stock Analysis Report
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