Is Now The Time To Consider Buying These Top Retail Stocks?
As we approach the tail-end of May, retail stocks appear to be among the most active stocks in the stock market now. Why? Namely, we are currently in the midst of a rather fruitful earnings season for the retail industry overall. Accordingly, I could see investors turning their radars towards the top retail stocks in the market because of this. In fact, Dicks Sporting Goods (NYSE: DKS) and American Eagle Outfitters (NYSE: AEO) reported stellar figures in their earnings yesterday.
On one hand, Dicks reported earnings of $3.79 a share on revenue of $2.92 billion, smashing analyst estimates. If that wasn’t enough, the company’s quarterly revenue skyrocketed by over 119% year-over-year. According to CEO Lauren Hobart, this is mainly thanks to the return of kids’ team sports, boosting its sales. On the other hand, AEO also topped Wall Streets’ estimates yesterday, reporting earnings of $0.48 a share on revenue of $1.03 billion. The company saw steady growth across the board thanks to persisting fashion trends. According to AEO, demand for its latest fashion offerings and stay-at-home activewear remains strong even now. Overall, DKS stock and AEO stock are currently looking at gains of over 150% in the past year. Could this indicate better times for the retail space moving forward?
For one thing, both of these companies cite consumer spending tailwinds as key growth factors for the quarter. This would be the case as pandemic restrictions continue to loosen and vaccination efforts ramp up accordingly. Just yesterday, the U.S. Centers for Disease Control and Prevention revealed that almost 50% of Americans have been vaccinated. No doubt, this would continue to boost investor confidence in reopening plays which, by extension, include retail stocks. With all that said, here are three retail stocks to know in the stock market today.
Top Retail Stocks To Buy [Or Avoid] This Week
- Costco Wholesale Corporation (NASDAQ: COST)
- Dollar General Corporation (NYSE: DG)
- Gap Inc. (NYSE: GPS)
Costco Wholesale Corporation
Costco is a multinational corporation that owns and operates a chain of membership-only retail stores. The retail titan presents one of the largest and most exclusive product categories to be found under a single roof. It is also known for carrying top-quality national and regional brands. Its brand-name merchandise is known for its substantially lower prices than are typically found at conventional wholesale or retail sources. COST stock currently trades at $385.12 as of 11:41 a.m. ET. The company will be reporting its third-quarter financials after the market closes today.
To get a glimpse of how the company is doing ahead of its earnings today, we can look at its latest April sales results that were reported earlier in the month. In it, Costco reported that net sales for the month were $15.21 billion, an impressive 33.5% increase compared to April 2020. A huge chunk of its comparable sales came from its Canada and U.S. markets. The company is also a dividend company and had announced an increase in its quarterly cash dividend last month to $0.79 per share.
Costco has been one of the more successful retailers in the last year. It has been experiencing surging sales and this quarter could be yet another strong quarter for the company. This is evident as more people have started to rely on the company’s membership-only stores for staples and discretionary items. After all, Costco sells its products on slimmer margins and ultimately relies on membership fees to drive profits. For these reasons, will you consider buying COST stock?
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Dollar General Corporation
Dollar General is a chain of variety stores that is headquartered in Tennessee. It is essentially America’s neighborhood general store and strives to make shopping hassle-free and affordable. It boasts over 17,000 convenient and easy-to-shop stores in 46 states. Dollar General has grown to become one of the most profitable stores in the rural U.S. DG stock currently trades at $204.07 as of 11:46 a.m. ET. The company has just announced its first-quarter financials today.
Diving in, net sales for the quarter were $8.4 billion. Dollar General also posted a diluted earnings per share of $2.82, an increase of 10.2% year-over-year. It also posted a net income of $677.7 million for the quarter. The company is off to a strong start for its fiscal 2021 and has exceeded expectations. It also sees strong underlying performance across its business. Besides, Dollar General reported that it benefitted from the most recent round of government stimulus payment. Also, it has raised its financial outlook for fiscal 2021.
In April, the company announced plans to hire up to 20,000 new employees through national hiring events to support ongoing efforts across store, distribution, transportation, and corporate operations. As a rapidly growing company, it continues to invest in people as part of its growth strategy for the months ahead as the economy continues to reopen. All things considered, is DG stock a top retail stock to buy?
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Topping off our list today is global apparel retailer, Gap Inc. The California-based company boasts a well-known portfolio of brands such as Old Navy, Gap, Banana Republic, and Athleta. Similar to most of the top retail companies now, the company continues to leverage its omnichannel capabilities, across digital and physical stores.
For a sense of scale, the company raked in net sales of $13.8 billion from its sales globally in 2020. More importantly, investors appear to be keen on GPS stock now. This would be the case seeing as it has more than tripled in value over the past year. I could see this uptrend continue on account of the company’s latest announcement. As it stands, GPS stock currently trades at $34.39 as of 11:47 a.m. ET.
Diving right into it, Gap is now collaborating with the largest retailer in the world, Walmart (NYSE: WMT). Yesterday, the duo revealed plans to launch Gap Home, a home décor focused division. According to Walmart executive VP Anthony Soohoo, this marks the beginning of a long-term partnership between the two retail titans. Notably, this would stand to benefit both companies. Gap, in particular, would be able to leverage Walmart’s massive customer base across the globe, boosting its addressable market. With Gap slated to report its first-quarter fiscal after today’s closing bell, will you be buying GPS stock?