Investors’ concerns over the pace of economic recovery due to the resurgence of COVID-19 cases have fostered market volatility. In addition, this month consumer sentiment fell to a pandemic-era low. However…
due to solid second-quarter corporate earnings results, the major stock market indexes are hovering near their all-time highs. According to a FactSet research report, more S&P 500 companies than average beat EPS estimates in the second quarter. In addition, several retail companies have strengthened their digital presence, positioning them well to gain in the coming months.
Furthermore, many retailers deal with inflation by passing on higher costs to their customers through price hikes. The consumer price index increased 5.4% in July, and the International Monetary Fund (IMF) warned that inflation could be persistent. So, while investors are worried about rising inflation, retailers that are passing on higher costs to customers are not expected to be impacted substantially.
So, we think it could be wise to bet on retail stocks Lowe’s Companies, Inc. (LOW – Get Rating), BJ’s Wholesale Club Holdings, Inc. (BJ – Get Rating), and Macy’s, Inc. (M – Get Rating), which have advanced significantly in price since reporting their impressive second-quarter earnings results. They are also favorably positioned to continue soaring in the coming quarters.
Click here to checkout our Retail Industry Report for 2021
Lowe’s Companies, Inc. (LOW – Get Rating)
LOW operates as a home improvement retailer internationally. The Mooresville, N.C. company offers a wide range of construction, maintenance, repair, remodeling, and decorating products. It operates more than 1,974 home improvement and hardware stores and sells its products through its website and mobile application.
The company acquired the STAINMASTER brand in April 2021. It is the most recognized and trusted carpet brand on the market. The acquisition is expected to advance LOW’s Total Home strategy and also expand its product portfolio.
LOW’s net sales for its fiscal second quarter, ended July 30, 2021, was $27.57 billion compared to $27.30 billion in the year-ago period. The company’s operating income for the quarter increased 6.4% year-over-year to $4.21 billion. In addition, its net earnings rose 6.7% year-over-year to $3.02 billion. Also, its EPS increased 13.6% year-over-year to $4.25.
Analysts expect LOW’s EPS and revenue to increase 24.2% and 2.2%, respectively, year-over-year to $11 and $91.53 billion in its fiscal year 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has soared 38.9% to close Friday’s trading session at $208.21. Also, it has gained 8.1% since reporting its second-quarter results on August 18.
LOW’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Momentum and Quality. Within the B-rated Home Improvement & Goods industry, LOW is ranked #23 of 65 stocks. Click here to see the additional POWR Ratings for LOW (Growth, Value, Sentiment, and Stability).
BJ’s Wholesale Club Holdings, Inc. (BJ – Get Rating)
BJ operates warehouse clubs on the east coast of the United States and sells its products through its website and mobile app. In addition, it offers perishable, edible grocery, general merchandise, non-edible grocery products, gasoline, and other ancillary services. BJ is based in Westborough, Mass.
The company announced the offering of Citizens Pay on June 3. It is a flexible, buy-now-pay-later payment option that allows members to…
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