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5 Solid Retail Stocks to Buy Amid Persistent Sales Challenges

The U.S. retail sector has had a turbulent journey over the past year as price pressures have been hampering sales. However, the sector has still managed to hold its ground and sales have largely been impressive.

The Commerce Department said last week that retail sales in April totaled $705.2 billion, unexpectedly remaining unchanged month over month after increasing 0.4% in March. This comes as a surprise, given that the retail sector put up a great show in the first quarter despite higher inflation and borrowing costs.

However, year over year, retail sales jumped 3% in April. Total sales for February through April 2024 were up 3% year over year.

Nonstore retailers increased 7.5% year over year in April, while food services and drinking places were up 5.5%.

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Higher prices have been hurting retail sales, but inflation is finally showing signs of a decline. Inflation eased in April after increasing in the first three months of 2024. The consumer price index (CPI) rose 0.3% sequentially in April and 3.4% from the year-ago levels.

Core CPI, which excludes volatile food and energy prices, increased 0.3% in April compared to the previous month, following a 0.4% rise in the first three months of the year.  Year over year, CPI rose by 3.6% in April, marking the smallest monthly increase since April 2021.

Cooling inflation has raised hopes that the Federal Reserve will finally start its planned interest rate cuts. Market participants believe that the Federal Reserve will go for at least two interest rate cuts of 25 basis points each.

Lower prices and borrowing costs bode well for the retail sector as it will give consumers more purchasing power.

Our Choices

Given this scenario, it would be wise to invest in retail stocks like Casey's General Stores, Inc. CASY, Walmart, Inc. WMT, DICK'S Sporting Goods, Inc. DKS,Canada Goose Holdings Inc. GOOS and Levi Strauss & Co. LEVI that have a strong potential for 2024. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Casey's General Stores, Inc. operates convenience stores under the Casey's and Casey's General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. CASY also operates two stores under the name "Tobacco City," selling primarily tobacco and nicotine products, one liquor store and one grocery store.

Casey's General Stores’ expected earnings growth rate for the current year is 10.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 60 days. CASY presently has a Zacks Rank #2.

Walmart has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. WMT’s product offerings include almost everything from grocery to cosmetics, electronics to stationery, home furnishings to health and wellness products, and apparel to entertainment products, to name a few.

Walmart’s expected earnings growth rate for the current year is 8.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. WMT presently carries a Zacks Rank #2.

DICK'S Sporting Goods, Inc. operates as a major omnichannel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf and water sports, among others. DKS offers these items through a blend of associates, in-store services and unique specialty shop-in-shops.

DICK'S Sporting Goods’ expected earnings growth rate for the current year is 2.8%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. DKS currently carries a Zacks Rank #2.

Canada Goose Holdings Inc. is a global outerwear brand. Canada Goose is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. GOOS’s jackets are sold in 36 countries around the world, including in two owned retail stores and four e-commerce stores.

Canada Goose Holdings’ expected earnings growth rate for the current year is 13.7%. The Zacks Consensus Estimate for current-year earnings has improved 6.4% over the past 60 days. GOOS currently sports a Zacks Rank #1.

Levi Strauss & Co. designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands. LEVI’s products are sold through chain retailers, department stores, online sites and brand-dedicated retail stores, and shop-in-shops. Levi Strauss & Co. is based in San Francisco.

Levi Strauss & Co’s expected earnings growth rate for the current year is 15.5%. The Zacks Consensus Estimate for current-year earnings has improved 4.1% over the past 60 days. LEVI carries a Zacks Rank #1.

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Walmart Inc. (WMT) : Free Stock Analysis Report

DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report

Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report

Levi Strauss & Co. (LEVI) : Free Stock Analysis Report

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