The retail industry had to undergo several rearrangements to remain operational last year. However, with most of the population being vaccinated with at least one dose, brick-and-mortar stores have seen…
rising foot traffic. The U.S. Census Bureau reported a 15.1% year-over-year rise in retail sales in August.
Moreover, the National Retail Federation (NRF) upgraded its retail sales growth forecast to between 10.5% to 13.5% for this year. The retail industry’s solid comeback in 2021 is evident as the SPDR S&P Retail ETF’s (XRT) has a year-to-date gain of 40.4% versus the broader SPDR S&P 500 ETF’s (SPY) 14.8% return.
In addition to the short-term support from the upcoming holiday season and rising foot traffic, the fundamental strength of prominent retail stocks such as Costco Wholesale Corporation (COST – Get Rating), BJ’s Wholesale Club Holdings, Inc. (BJ – Get Rating), and Casey’s General Stores, Inc. (CASY – Get Rating) make them solid long-term bets.
Costco Wholesale Corporation (COST – Get Rating)
This multinational retail giant needs no introduction. COST typically sells dry, packaged foods and groceries, appliances, and electronics. The company also operates through its e-commerce website in several countries.
In July, COST entered into a collaborative venture with Uber Technologies, Inc. (UBER) to deliver grocery items door-to-door. With stay-at-home orders and lockdowns imposed in the past year, the demand for home deliveries has increased significantly. Given this backdrop, COST’s on-demand delivery facility might prove to be profitable.
For the fiscal fourth quarter that ended August 29, COST’s total revenue increased 17.4% year-over-year to $62.68 billion. This can be attributed to a 17.5% year-over-year increase in net sales to $61.44 billion. Net income attributable to COST came in at $1.67 billion, up 20.2% from the same period last year, while net income per common share was up 20.1% from the prior-year quarter to $3.76.
The consensus EPS estimate for the current year (fiscal 2022) of $12.07 indicates an 8.8% year-over-year rise. Likewise, a consensus revenue estimate of $212.33 billion for the ongoing year reflects an improvement of 8.4% from the prior year. Moreover, COST has an impressive earnings surprise history as it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 26.6% over the past year and 19.3% year-to-date to close yesterday’s trading session at $449.35.
COST’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which equates to a Buy rating in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
COST has a Stability, Sentiment, and Quality grade of B. In the 41-stock Grocery/Big Box Retailers industry, it is ranked #14. This industry is rated A.
Click here to see additional grades for COST (Growth, Value, and Momentum).
BJ’s Wholesale Club Holdings, Inc. (BJ – Get Rating)
BJ operates as a warehouse club operator in the United States East Coast. The company provides an assortment of perishable products, general merchandise, and gas services alongside other ancillary services.
On September 8, the company unveiled its list of new kid’s toys for 2021. As the holiday season is nearing, the company expects these new additions to contribute significantly to the company’s revenues.
BJ further expanded its footprint in New Hampshire with the opening of its 22nd club location at Seabrook on July 2, welcoming the Seabrook community with lucrative offers and experiences.
On June 3, BJ launched Citizen Pay, its buy-now-pay-later option for purchases over…
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