Despite supply chain disruptions, high inflation, and the resurgence of COVID-19 cases, the holiday season has fostered optimism among retailers. And experts believe this optimism will persist for some time. According to National Retail Federation’s (NRF) Chief Economist Jack Kleinhenz, the 2021 holiday season appears to be on track to…
exceed the NRF’s retail sales growth forecast of between 8.5% and 10.5%. And investors’ interest in the retail industry is evident in the VanEck Vectors Retail ETF’s (RTH) 7.6% gains over the past three months versus the SPDR S&P 500 ETF’s (SPY) 3.2% returns.
Furthermore, retailers’ online segments are thriving, owing to increased demand, massive discounts, and the sheer convenience they offer ahead of Christmas and New Year.
Therefore, we think it could be wise to bet on fundamentally sound retail stocks Best Buy Co., Inc. (BBY – Get Rating), Ulta Beauty, Inc. (ULTA – Get Rating), Genuine Parts Company (GPC – Get Rating), and Williams-Sonoma, Inc. (WSM – Get Rating). These stocks are currently trading below their 52-week highs.
Best Buy Co., Inc. (BBY – Get Rating)
BBY retails technology products in the United States and Canada. The Richfield, Minn.-based company operates in two segments: Domestic and International. It has more than 1,000 stores and approximately 100,000 employees.
On November 23, 2021, BBY acquired Yardbird, a leading direct-to-consumer company that specializes in premium outdoor furniture. This is expected to boost the company’s sales as consumers are afforded a wider variety of goods from which to choose.
BBY’s revenue came in at $11.91 billion for its fiscal 2022 third quarter, ended October 30, 2021, compared to $11.85 billion in the previous period. Its operating income came in at $670 million, up 19.4% year-over-year, and its non-GAAP EPS was $2.08, compared to $2.06 in the year-ago period.
Analysts expect BBY’s revenue to be $52.16 billion in its fiscal year 2022, representing a 10.4% year-over-year rise. The company’s EPS is expected to increase 27.7% year-over-year to $10.10 in the current year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 3.9% in price to close yesterday’s trading session at $106.68. It is currently trading 24.9% below its 52-week high of $141.97, which it hit on November 22, 2021.
BBY’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
BBY has an A grade for Momentum and a B grade for Value and Quality. It is ranked #13 of 44 stocks in the Specialty Retailers industry. Click here to see the additional POWR Ratings for Growth, Stability, and Sentiment for BBY.
Note that BBY is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Ulta Beauty, Inc. (ULTA – Get Rating)
ULTA operates as a retailer of beauty products in the United States. The Bolingbrook, Ill.-based company runs approximately 1,264 retail stores across 50 states and distributes its products through its website, ulta.com, and mobile applications.
On December 2, 2021, Dave Kimbell, the company’s chief executive officer, said, “The Ulta Beauty team delivered outstanding results again this quarter. For the third quarter, we delivered record sales and earnings, increased our market share, and expanded our Ultamate Rewards loyalty program to nearly 36 million members. This strong third quarter performance reflects the strength and resiliency of the Beauty category, the power of the Ulta Beauty differentiated model, and the impact of our winning culture and team.”
ULTA’s net sales increased 28.6% year-over-year to $2 billion in its fiscal third quarter, ended October 30, 2021. Its net income came in at $215.29 million, up 187.8% year-over-year. And its EPS also increased 198.5% year-over-year to $3.94.
Analysts expect ULTA’s revenue and EPS to…
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