Should Investors Have These Top Retail Stocks On Their March Watchlist?
It has been an interesting time for retail stocks, to say the least. As most of us know, the traditional retail industry was hit hard during the early phases of the pandemic. To this end, how are the top retail companies doing almost a year later? Well, a look at the current retail earnings season could paint a clearer picture of this. After all, the industry has had the time to adapt. From holding massive seasonal sales to digital acceleration and restructuring, the retail industry continues to make massive adjustments.
This has benefited companies such as Macy’s (NYSE: M) who reported its first quarterly profit after a year. CEO Jeff Gennette cited the importance of Macy’s digital engine in engaging with shoppers in this age. If more traditional retail players aren’t to your liking, digital retail companies are still meeting consumer demands now as well. For instance, online styling platform Stitch Fix (NASDAQ: SFIX) has seen its share price more than triple over the past year.
That’s not all, two key factors could point towards a sooner than expected recovery for the sector as well. Firstly, President Joe Biden announced yesterday that the U.S. is aiming to deliver enough coronavirus vaccines for all adults by the end of May. This is two months earlier than his administration’s earlier projections. This paired with an incoming wave of $1,400 stimulus checks could see the industry pick up steam through the tail end of the pandemic. With all the attention on the retail industry now, could one of these top retail stocks to watch be your next big investment?
Best Retail Stocks To Watch
- Target Corporation (NYSE: TGT)
- Walmart Inc. (NYSE: WMT)
- Kohl’s Corporation (NYSE: KSS)
- Nordstrom Inc. (NYSE: JWN)
For starters, we will be looking at Target. If anything, Target is one of the major retailers to come out of the pandemic better than it initially was. TGT stock exceeded its pre-pandemic levels in August and continued to surge, hitting a new all-time high back in January. Moreover, the company beat Wall Street’s estimates in its recent quarter fiscal posted yesterday as well. Target also saw its digital sales double over the same period. Despite all this, TGT stock dipped by 6% during intraday trading yesterday. Could this be a good time to buy on the dip?
Well, first, it is important to know why the selloff occurred. In a rather aggressive play, Target revealed that it would be investing $4 billion into store growth initiatives over the next few years. Given that this is a huge leap from its previous figure of $2.7 billion, it seems that investors were spooked by the numbers.
Now, Target’s bold investment plan will be put towards accelerating new store growth and remodeling older stores. Overall, Target mentioned that this will serve to refine e-commerce deliveries in the long run. Could these major short-term investments set up long-term gains for TGT stock? I’ll let you decide.
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Another top retail company in the limelight now would be Walmart. For the uninitiated, the company operates a chain of hypermarkets, discount department stores, and grocery stores. More importantly, Walmart reported a record revenue in its Q4 and fiscal year 2021 report last month. All in all, the company reported an annual revenue of $560 billion. Throughout its latest quarter, it saw U.S. e-commerce sales increase by 69% compared to the same quarter last year. However, WMT stock is down by over 5% since it posted earnings on February 18. Despite this, Walmart continues to make strategic plays.
On Monday, there were two major pieces of news related to Walmart’s operations. To begin with, the company removed the minimum order requirement for its Express delivery services. This is a solid move by the company as Express delivery allows customers to receive their online orders within a matter of hours. You could say that it resembles Amazon’s (NASDAQ: AMZN) Prime Now delivery services but for household goods instead.
Furthermore, it also seems that Walmart is also busy working on expanding its business portfolio. According to Bloomberg, the company has brought over two veteran bankers from Goldman Sachs (NYSE: GS) to lead its new fintech start-up. With Walmart firing on all cylinders, will you be adding WMT stock to your watchlist?
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Kohl’s is a Wisconsin-based department store retail chain that is also on the radar now. For some context, it is one of the largest department store chains in the U.S. with over 1,100 locations nationwide. It offers customers a wide array of products such as home appliances, adult and child apparel, and home decorations to name a few. Accordingly, you would expect that the company’s offerings are in demand as homebound consumers would spend more time making home improvements. Likewise, KSS stock has more than quadrupled since its 52-week low in April 2020. With the company posting its fourth-quarter earnings yesterday, could KSS stock have more room to grow?
Diving right into it, Kohl’s posted earnings of $2.22 a share on revenue of $6.1 billion in the quarter. Notably, the company blew past Wall Street estimates in both of these aspects. Kohl’s also ended the quarter in a solid financial position with $2.3 billion in cash on hand. Not to mention, the company added 2 million new customers last year.
This is thanks to its existing partnership with e-commerce giant Amazon who has return kiosks set up in Kohl’s locations across the U.S. No doubt, this would increase overall foot traffic for Kohl’s which could lead to more shoppers in physical locations post-pandemic. Given all of this, will you be watching KSS stock now?
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Next, we have luxury department store chain Nordstrom. The full-line retailer markets luxury apparel, footwear, and other cosmetic products in its stores. Given the quality of Nordstrom’s offerings, consumers would see it as a go-to amidst the recent holiday season. At the very least investors appear to think so seeing as JWN stock has surged by over 130% in the past six months.
Not forgetting, the company was among the retail giants reporting earnings yesterday. In the same way, Kohl’s also topped analysts’ estimates in terms of its sales and earnings for the quarter. In detail, the company posted an earnings per share of $0.21 on revenue of $3.65 billion. It cites continued sequential sales improvement across its core Nordstrom and Nordstrom Rack sections as key factors for this performance. Evidently, the apparel industry also seems to be making a comeback as the company saw $2 billion in digital sales. This represented 54% of sales revenue for the quarter.
Additionally, Nordstrom also announced a strategic partnership with home gym equipment company Tonal. Through this agreement, Tonal’s home strength training systems are now available for sale in Nordstrom locations across 20 states. With an expanding list of offerings and recovering sales trends, could JWN stock return to its former glory?