Yahoo Finance 5 Solid Stocks to Buy as Retail Sector Aims for a Rebound
The retail sector has been suffering due to inflationary pressures. However, the sector has been bravely facing the price challenges and has tried to hold its ground over the past year.
The Commerce Department reported on Jun 18 that retail sales increased 0.1% month over month in May after declining 0.2% in April but was lower than the consensus estimate of a rise of 0.3%.
Year over year, retail sales rose 2.3%. The negligible jump in May came as inflation finally started showing signs of easing in April and maintained the same pace of decline in May.
A sharp decline in fuel prices saw hurt receipts in gas stations. However, the 2.2% decline in receipts at gas stations 2.2% was somewhat adjusted by a 2.8% jump in sales in sports goods, books and music stores.
Also, online sales increased 0.8% month over month in May.
Cooling inflation has been helping the retail sector rebound. The consumer price index (CPI) reading came in unchanged in May on a month-over-month basis after rising 0.3% in April. This was also the softest reading since July 2022.
Year over year, CPI rose 3.3%, which came in slightly below analysts’ expectation of a rise of 3.4%.
The Federal Reserve said last week that inflation is still high but left interest rates unchanged in its June FOMC meeting. Moreover, the Fed said it sees only one rate cut this year, down from the three projected in March.
However, several market participants see this as the beginning of the Fed’s planned rate cuts and are confident that slowing inflation could encourage the central bank to finally go for two interest rate cuts this year, with the first likely to come in September.
Lower borrowing cost bodes well for the retail sector and the broader economy.
Our Choices
Given this scenario, it would be wise to invest in retail stocks like The Gap, Inc. GPS, Canada Goose Holdings Inc. GOOS, Walmart, Inc. WMT, JD.com, Inc. JD and J.Jill, Inc. JILL 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.
The Gap, Inc. is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. GPS offers products for men, women and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix and Hill City brands.
The Gap’sexpected earnings growth rate for the current year is 21.7%. The Zacks Consensus Estimate for current-year earnings has improved 27.9% over the past 60 days. GPS currently sports a Zacks Rank #1.
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’ 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.
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 9%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. WMT presently has a Zacks Rank #2.
JD.com, Inc. operates as an online direct sales company in China. JD, through its website www.jd.com and mobile applications, offers a selection of authentic products.
JD.com’s expected earnings growth rate for the current year is 6.7%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the past 60 days. JD currently carries a Zacks Rank #2.
J.Jill, Inc. operates as a specialty retailer of women’s apparel. The company offers sweaters, tops, pants, dresses, shorts, skirts, sleepwear and accessories. J. Jill markets through retail stores, website and catalog.
J.Jill’s expected earnings growth rate for the current year is 11.8%. The Zacks Consensus Estimate for JILL’s current-year earnings has improved 7% over the past 60 days. JILL currently carries a Zacks Rank #1.
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Walmart Inc. (WMT) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
JD.com, Inc. (JD) : Free Stock Analysis Report
J.Jill, Inc. (JILL) : Free Stock Analysis Report
Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report
