For Immediate Release
Chicago, IL – March 30, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Nordstrom JWN, Target Corporation TGT, Casey’s General Stores CASY, Tapestry, Inc. TPR and Costco Wholesale COST.
Here are highlights from Tuesday’s Analyst Blog:
Retail Sector Poised for Steady Recovery: 5 Picks
Retail sales slowed down in February owing to rising costs but the sector appears on track for a steady recovery. A not-so-impressive holiday season had raised doubts over the sector’s prospects but a bounce back in January eased concerns. In another good sign, people are willing to spend despite rising costs.
If the sector continues to perform steadily, sales are likely to reach nearly $5 trillion this year, according to a new report from the National Retail Federation (“NRF”). Moreover, e-commerce will continue to play an important role in driving retail sales. Given this scenario, stocks like Nordstrom, Target Corporation, Casey’s General Stores, Tapestry, Inc. and Costco Wholesale should benefit in the near term.
Retail Sales Set to Soar Faster Than Pre-Pandemic Rate
According to a report from NRF, retail sales in the United States will jump 6% to 8% in 2022, which is higher than the pre-pandemic growth rate of 3.7%. Overall retail sales, excluding automobile sales, restaurant and gasoline sales, is projected to total between $4.86 trillion and $4.95 trillion this year.
Retail sales grew 14% in the United States last year, hitting a 20-year-high after the sector took a bad hit in 2020 following the coronavirus outbreak. “The NRF expects retail sales to increase in 2022, as consumers are ready to spend and have the resources to do so,” NRF president and CEO Matthew Shay said.
The report also mentions that e-commerce, which has been playing an important role in boosting retail sales, will continue to act as a key driver in the near term. According to the report, non-store and online retail sales will grow between 11% and 13% to $1.17 trillion and $1.19 trillion.
The NRF stated last month that overall retail sales in the United States increased 3.8% seasonally adjusted from December and were up 13% year over year in January.
Retail Sector on Track for Recovery
The retail sector had a choppy ride over the past two years. After suffering for months following the COVID-19 outbreak, the sector started making a fast recovery earlier last year as millions got vaccinated and the economy started reopening.
However, sales started slowing down after the $3 trillion fiscal stimulus ended, which saw sales declining during and around last year’s all-important holiday season. Rising costs also played spoilsport.
This saw retail sales growing 0.3% in February, after an upwardly revised 4.9% in January. Yet, sales are a lot higher than the pre-pandemic levels. On a year-over-year basis, retail sales jumped 17.6% in February.
Hiring too is again at a record high and employment data released last week show that jobless claims are at a 62-year low. This means that more people are going back to work, which should help their income grow.
A rise in income is thus always going to help the retail sector and give consumers more purchasing power. Also, Americans managed to save a lot last year thanks to the fiscal stimulus, which is helping them spend more.
Given this scenario, investing in retail stocks with a strong online presence seems wise. We have chosen four stocks for you. Each of the 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.
Nordstrom is a leading fashion specialty retailer in the United States. JWN offers an extensive selection of both branded and private-label merchandise, which are positioned in the upscale segment of the industry. Nordstrom offers high-quality apparel, shoes, cosmetics and related accessories for men, women, young adults and children through a variety of channels.
Nordstrom’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 61.8% over the past 60 days. JWN sports a Zacks Rank #1.
Target Corporation has evolved from just being a pure brick-and-mortar retailer to an omni-channel entity. TGT 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. Target Corporation provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids.
Target Corporation’s expected earnings growth rate for the current year is 6.7%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 60 days. TGT has a Zacks Rank #2.
Casey’s General Stores 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 offers a variety of food selection (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco and nicotine products, health and beauty aids, school supplies, houseware, pet supplies, and others.
Casey’s General Stores’ expected earnings growth rate for the current year is 5.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. CASY has a Zacks Rank #2.
Tapestry is a designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR offers lifestyle products, including handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.
Tapestry reported stronger-than-expected second-quarter fiscal 2022 earnings, thanks to robust demand and strong customer engagement. TPR posted second-quarter adjusted earnings of $1.33 per share, beating the Zacks Consensus Estimate of $1.19.
Tapestry’s expected earnings growth rate for the current year is 22.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. TPR has a Zacks Rank #2.
Costco Wholesale sells high volumes of foods and general merchandise (including household products and appliances) at discounted prices through membership warehouses. COST is one of the largest warehouse club operators in the United States. Costco Wholesale also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
Costco Wholesale’s expected earnings growth rate for the current year is 17%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. COST has a Zacks Rank #2.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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