Could These Be The Best Retail Stocks To Buy Now?
Retail stocks have had a tough year so far. This is due to the coronavirus pandemic bringing all brick-and-mortar stores to a grinding halt. However, the retail industry has been focusing on digital acceleration and some of the biggest names have evidently started to recover in the stock market. A prime example would be Target (TGT Stock Report). It restructured its business model to accommodate socially distanced services. As a result, the stock has seen gains of 93% since the stock market crash in March. Surprisingly, some companies are even soaring higher than before. For example, Nike’s (NKE Stock Report) share prices hit at an all-time-high during yesterday’s intraday trading.
Granted, after Black Friday and Cyber Monday, investors may be wondering if the recent rallies are coming to an end. All things considered, the coming holiday season could provide more incentive for new investors to jump on to the retail train. This is because it will be the busiest time of the year for the retail industry. The past weekend could just be the test run for companies who are looking to refine their new digital sales strategies. Ideally, with this experience, the stage should be set for the battle of the top retail stocks at the end of this month.
In addition, the strings of positive vaccine developments in recent weeks from the likes of Pfizer (PFE Stock Report) and Modena (MRNA Stock Report) have brought fresh hopes of an economic reopening sooner than later. With all these in mind, which retail companies should investors be watching now? Here is a list of 3 for you to consider.
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Top Retail Stocks To Watch This Week: Nordstrom Inc.
First, we have Nordstrom (JWN Stock Report). It is a Washington-based luxury department store chain. The company has been around since 1901 and began as a shoe store. The full-line retail titan now has departments for clothing, footwear, handbags, jewelry, accessories, cosmetics, and fragrances. As of 2020, Nordstrom operates 100 stores across 40 U.S. states and 3 Canadian provinces. Its share price had more than doubled in November alone. What could be the source of all this movement?
Let us take a look at the company’s financials in the most recent quarter. In its third-quarter fiscal report in November, Nordstrom saw sequential improvement in sales and earnings relative to the prior quarter. Yet, it reported a 15% decrease in revenue year-over-year. Notably, Nordstrom’s digital sales represented 54% of its total sales and increased by 37% in the quarter. This likely helps to offset the loss of revenue from coronavirus lockdowns which are still impacting the company. How has the company been taking its losses so far?
Clearly, Nordstrom is not sitting idle. On Cyber Monday, the company launched massive sales. This entailed the slashing of prices on 24,000 deals with discounts of up to 75%. The items included those of luxury brands like Tory Burch and Tapestry (TPR Stock Report) subsidiary Kate Spade. As a result, the company could be seeing the beginning of a great quarter considering how its luxury items would be highly sought after by holiday shoppers. Only time will tell if JWN stock could bring more value to shareholders. That said, is JWN stock a top retail stock worth watching?
Top Retail Stocks To Watch This Week: Kohl’s Corporation
Kohl’s (KSS Stock Report) has been seeing a lot of activity in its stock recently. On Tuesday, the stock shot up by over 13% after it announced a collaboration with Sephora. This added to the momentum that KSS stock has been seeing in the past month. The Wisconsin-based department store retail chain saw share prices up by over 50% in November. What could the company be doing right to deserve this kind of attention from investors?
The deal with Sephora will allow Kohl’s to offer a plethora of higher-end beauty products from Sephora. This is set to take place in the fall of 2021 across 200 locations. Investors certainly liked this news, judging by how the stock reacted. This is a strategic move by Kohl’s as it pads its cosmetics department with one of the upcoming names in the industry. Essentially this expands its range of customers by attracting younger shoppers. Despite the current situation, the company appears to have its sights set on the bigger long-term game. What else could the company have up its sleeves moving forward?
Upon closer inspection, its recent quarter fiscal announced in November appears to tell a different story. The company saw a 13% decline in net sales year-over-year. Understandably, its digital sales rose by 25% in the same time. Just like the rest of its competitors, the second and third waves of coronavirus still continue to interrupt sales. On the positive side, its strong liquidity position would likely position Kohl’s to continue navigating through these tough times effectively. Overall, do you think KSS stock is worth adding to your watchlist?
Top Retail Stocks To Watch This Week: Coty Inc
Finally, we have cosmetic industry giant Coty (COTY Stock Report). The company is a multinational beauty company that was founded in 1904 by François Coty. The company develops, manufactures, markets, and distributes a large array of products via its subsidiaries. These include but are not limited to fragrances, cosmetics, skincare, and hair care products. The company boasts one of the most impressive portfolios of brands in the industry like Balenciaga, Calvin Klein, Marc Jacobs, and a majority hold on Kylie Cosmetics.
Significantly, its share price is up by 128% in the past month. However, its recent quarter fiscal released in early November showed a 20% decline in revenue year-over-year. Yet, adjusted net income rose by 65% from a year ago, to the relief of shareholders. Besides, the company’s digital efforts had successfully doubled its e-commerce penetration as a percentage of overall sales to 13%.
The company recently completed the sale of its Wella stakes to private equity company KKR. The transaction involves Coty receiving $2.5 billion for the sale of a majority of its stakes in the professional and retail hair business. This move will help the company bolster its cash flow in the next fiscal quarter. In doing so, Coty will be able to reduce its net debt. CEO Sue Nabi said, “The Wella sale is also a key part of the simplification of Coty: streamlining our structure to focus on our two core businesses: Prestige Beauty and Consumer Beauty.” As the company becomes leaner and meaner, could COTY stock be the best retail stock to buy?