6 retail stocks to play the reopening
Last week, the BEA released personal income and expenditure figures for the month of April. Although it appears that income is going down (real personal disposable income or DPI fell 15.1% in April) and spending is moving in the same direction (real personal consumption expenditure, or PCE has gone down 0.1%, the goods component down 1.3% and the services component up 0.6%), this is not a negative situation. And this is clear from the release itself.
First, the decline in real income appears to come from a reduction in the American Rescue Plan Act of 2021 (compared to March 2021), as well as the decrease in unemployment compensation program payments in the event of pandemic (again, compared to Mars). Some states dissuade people from staying at home by denying unemployment benefits.
Thus, the government is pushing people who cannot work from home to return to work. It has always been an opportunity to get the economy back on its feet.
Second, the personal savings rate for April was 14.9%. Although significantly lower from 2020 highs, this number is higher than it has ever been before, dating back to 1960. So it is evident that people still prefer to save rather than spend.
And a look at the details of PCE tells us a bit more about what they do. So when we say that spending on goods has declined, it should be noted that the decline was generalized in the non-durable goods category, and led by food and beverages.
In addition, spending on durable goods actually increased as people increased their spending on motor vehicles and parts. On the services side, the increase comes from leisure, catering and accommodation services.
So basically people say they are pretty much tired of staying home, and especially cooking at home. They are more than willing to go out when they can to eat, travel and have a little fun. While some may worry about inflation, the numbers indicate that people think they have the money to let go.
The Conference Board’s consumer confidence index for May is 117.2, down slightly from April’s 117.5. The survey results indicate that consumers are very optimistic about the current situation and believe that the good times will not last indefinitely (naturally, since everyone expects government payments to stop soon). And the Expectations Index, which fell from 107.9 last month to 99.1 this month, can hardly be considered disappointing.
All of this is, of course, good news for the retail, restaurant, clothing / footwear, fitness, leisure, beauty, etc. industries. So here are some great stocks of these hot segments that are worth picking up today-
Foot Locker, Inc. FL
New York-based Foot Locker is a shoe and sportswear retailer. The company operates websites and mobile applications, aligned with the trademarks: footlocker.com, ladyfootlocker.com, six02.com, kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, footlocker.com. au, runnerspoint.com, sidestep-shoes.com, footlocker.hk, footlocker.sg and footlocker.my.
As of January 30, 2021, the Company operated 2,998 stores in 28 countries in North America, Europe, Asia, Australia and New Zealand. It also has 127 Foot Locker franchise stores in the Middle East.
It is a member of the Retail Industry – Clothing & Footwear, which is among the 17% of industries ranked by Zacks.
Zacks Company Rank # 1 (Strong Buy) with Value and Growth scores of A and Momentum score of B topped Q1 estimates by 71.9%. Current expectations for its revenue and profit growth in 2022 (end of January) are set at 11.2% and 89.0% respectively.
Growth is expected to normalize the following year at 1.6% for revenues and 3.2% for profits. The trend for revised estimates is also encouraging: a 2022 profit estimate up 14.7% and a 2023 profit estimate up 8.7% in the last 30 days.
Genesco Inc. GCO
The Nashville-based specialty retailer sells shoes, hats and accessories in retail stores in the United States and Canada and online. Its popular brands are Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection. It also wholesalers footwear under its Johnston & Murphy brand and under the Dockers licensed brand.
This is another member of the Retail – Apparel and Footwear sector, which has returned 27.7% to investors since the start of the year.
The Zacks Rank # 1 company has a value score of B and growth and momentum scores of A. Since beating the Zacks consensus estimate by 238.6% in its first fiscal quarter ending in April, the company saw its estimates revised up slightly. Current expectations are for revenue and profit growth of 18.6% and 413.6% this year, followed by 4.3% and 31.1% the following year.
MarineMax, Inc. HZO
MarineMax is the nation’s largest pleasure craft and yacht retailer. Focused on premium brands, such as Sea Ray, Boston Whaler, Meridian, Hatteras, Azimut Yachts, Ocean Alexander, Galeon, Grady-White, Harris, Crest, Scout, Sailfish, Sea Pro, Scarab Jet Boats, Aquila and Nautique , MarineMax sells new and used pleasure boats and related marine products and services, and provides brokerage and charter services for yachts. MarineMax currently has 62 outlets in 17 US states and operates MarineMax Vacations in Tortola, British Virgin Islands.
A member of the Retail Industry – Miscellaneous (top 19%), MarineMax has a Zacks Rank # 1, Value and Growth scores of A, and Momentum score of C. During the March quarter, he has topped Zacks’ consensus estimate for earnings by 131.5%, sending his 2021 estimate (end of September) up 26.9%. the 2022 estimate has also been revised upwards by 26.3%. The company is currently expected to increase revenues by 33.9% and 2.4%, respectively in 2021 and 2022. Its profits are expected to jump 60.2% and 4.3% in those years.
Beauty Ulta Inc. ULTA
Headquartered in Bolingbrook, Ill., Ulta is a leading beauty retailer with over 25,000 products including cosmetics, perfumes, skin care, hair care, bath products. and body and salon styling tools from approximately 500 well-established and emerging beauty brands across all categories and prices. points. Its private label products are Ulta Beauty Collection branded cosmetics, skin care and bath products.
At the end of the first quarter, it had 1,290 stores, and expects to add 40 more and renovate 19 this year. Each of these stores also has a full-service salon with hair, skin and eyebrow services. It also sells through its apps and website ulta.com. The company has a strong supplier base, including Estée Lauder, L’Oréal and Shiseido. Its skincare category has been doing particularly well lately, with consumer awareness growing.
Zacks ranked # 1 Ulta is also a member of the Retail – Miscellaneous industry. It has a value score of D but growth and momentum scores of A. The company topped estimates by 113.5% in the fiscal first quarter ending in April.
Zacks’ consensus estimate for fiscal 2022 and 2023 is up 31 cents (3.2%) and 16 cents (1.3%), respectively. Revenue and profits for the current year are currently expected to increase by 18.0% and 112.7%, respectively. For next year, they are expected to increase by 17.2% and 21.9% respectively.
Sally Beauty Holdings, Inc. SBH
Based in Denton, Texas, Sally Beauty is one of the largest beauty product distributors in the United States, Puerto Rico, United Kingdom, Chile, Belgium, Canada, Mexico, Spain, in Germany, France, Ireland, the Netherlands and Peru. In its 5,061+ stores, it sells a wide range of products including hair coloring and care products, styling tools, skin and nail care products and other beauty items at different prices.
Another member of the Retail – Miscellaneous industry, Sally Beauty has a Zacks Rank # 1, Value Score A, Growth Score D and Momentum Score C. The company beat the Zacks consensus estimate for the March quarter of 307, 1%. Since then, its estimate for fiscal year 2021 (end of September) has risen by 30%.
The estimate for 2022 is up 19.7%. The expected growth in revenue and profits for 2021 is 7.4% and 81.2% respectively. For 2022, growth should be 2.4% and 4.9% respectively.
Ruth’s Hospitality Group, Inc. RUTH
Based in Winter Park, Florida, Ruth’s is the largest gourmet grill company in the United States, measured by the total number of company-owned and franchisee restaurants. It has over 150 Ruth’s Chris Steak House restaurants around the world, specializing in USDA Prime quality steaks.
Ruth’s belongs to the Retail Industry – Restaurants, which is among the 35% of industries ranked by Zacks. Zacks Rank # 1 with a value score of D and growth and momentum scores of B topped the March quarter estimate by 160.0%.
Subsequently, his estimate for 2021 jumped 63.8% while the estimate for 2022 jumped 40.0%. Its turnover and profits are expected to increase by 47.7% and 350.0% respectively this year and by 13.6% and 40.4% respectively next year.
Price movement over one month
Image source: Zacks Investment Research
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