Yahoo Finance 3 Retail Stocks to Buy as Inflation Shows Signs of Cooling
Retail sales remained stagnant in April, demonstrating customer fatigue arising out of stubborn inflation. It seems that Americans are going slow on their spending as inflation continues to sting, and elevated interest rates have made debts less lucrative.
Per the Commerce Department, retail sales for April remained virtually unchanged at $705.2 billion. The March number was revised down to a 0.6% rise from the previously reported 0.7%. Rising prices have had an impact to the effect that retail sales fell short of expectations in April. The consensus estimate for the period was a 0.4% increase.
Sales were primarily dragged down by a 1.2% fall in online business. Business at electronics stores increased 1.5%. Sales at home furnishings stores slipped 0.5%. Sales at clothing and accessories stores posted a 1.6% gain.
Usually, inflation and purchasing power have a decisive impact on retail sales. In an environment where prices of consumer goods are steadily going up and interest rates are raised to tackle it, people end up having less money at their disposal to spend on non-essential goods. The consumer price index (CPI) numbers for April were also released yesterday. Consumer prices increased in April but lagged the consensus estimate.
CPI rose 0.3% from March to April, the Labor Department said Wednesday, down slightly from 0.4% in March. Core CPI, which excludes volatile food and energy costs, also eased in April. Following this report, market participants were pricing in a roughly 53% chance the Fed would begin to cut rates at its September meeting, per CME’s FedWatch Tool.
While there are indications from the central bank that it would need to assess more economic data before actually going for a rate cut, inflation coming in below expectations is good news for the retail sector. With retail earnings underway, it would be prudent to keep an eye on the sector anyway.
We have thus selected three stocks that we believe would be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
The TJX Companies, Inc. TJX is a discount apparel and home fashions retailer.
TJX’s expected earnings growth rate for the current year is 9%. The Zacks Consensus Estimate for its current-year earnings has improved 1% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
PriceSmart, Inc. PSMT is an operator of American-style membership shopping warehouse clubs.
PSMT’s expected earnings growth rate for the current year is 14.3%. The Zacks Consensus Estimate for its current-year earnings has improved 5.9% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
Levi Strauss & Co. LEVI is a global retailer of apparels and related accessories.
LEVI’s expected earnings growth rate for the current year is 15.5%. The Zacks Consensus Estimate for its current-year earnings has improved 4.1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of B.
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The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
PriceSmart, Inc. (PSMT) : Free Stock Analysis Report
Levi Strauss & Co. (LEVI) : Free Stock Analysis Report
