U.S. Markets close in 2 hrs 9 mins

Renewed Consumer Confidence Spells Good Times for Retailers

Sumit Singh
Does FireEye (FEYE) have what it takes to be a top stock pick for momentum investors? Let's find out.

After the sales uptick in March, retailers now have another reason to cheer. Consumer confidence rebounded in the month of April after a decline in the last month and the index even inched close to its 18-year high level. Courtesy of a strengthening labor market, tax reform and rising income, Americans are way more confident now, brushing aside recent hiccups like the U.S.-China face-off, apprehensions of a tighter monetary policy and rising bond yields.

Per the Conference Board data, the Consumer Confidence Index surged to 128.7 this month from March’s revised reading of 127.0. Analysts pointed that sales pickup and rising consumer confidence underscore the underlying strength in the economy. Certainly, this positive sentiment is likely to translate into higher consumer spending — one of the pivotal factors driving the economy. An uptick in this metric is welcome news for retailers.

More confident consumers also bode well as the fortunes of retailers depend on their willingness to spend. Consumers nowadays have clearly taken a liking to online shopping over visiting brick-and-mortar stores. With the evolving shopping patterns, retailers are getting smarter embracing the omni-channel mantra to provide a seamless shopping experience, whether in stores or online or through smartphones via apps.

Given the favorable backdrop, the Retail-Wholesale sector is likely to catch investors’ attention. The sector has gained roughly 11% in the past six months, outpacing the S&P 500’s growth of 3%. Per the latest Earnings Preview, the sector is likely to witness bottom-line growth of 11.7% in the current reporting cycle, faring better than the last reported quarter’s rise of 3%. The top line is also projected to climb 7.6% compared with 9.7% increase registered in the last reported quarter.

With the earnings season picking up pace, it seems prudent to snap up some retail stocks that are likely to beat estimates. These are stocks with a favorable combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ruth's Hospitality Group, Inc. RUTH has an Earnings ESP of +1.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

KAR Auction Services, Inc. KAR has an Earnings ESP of +5.41% and a Zacks Rank #1.

Urban Outfitters, Inc. URBN has an Earnings ESP of +0.62% and a Zacks Rank #2.

Nordstrom, Inc. JWN has an Earnings ESP of +8.97% and a Zacks Rank #2.

Tapestry, Inc. TPR has an Earnings ESP of +1.83% and a Zacks Rank #2.

Investor Alert: Breakthroughs Pending

A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.

Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.

Click here to see them>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Ruth's Hospitality Group, Inc. (RUTH) : Free Stock Analysis Report
KAR Auction Services, Inc (KAR) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research