3 Retail Stocks To Watch Amid The Pent-Up Demand In The Space
Safe to say, it has been an interesting year for the retail industry. If anything, the pandemic has shown that not all retail stocks are made equal. After all, the e-commerce sector of the industry exploded onto the scene when coronavirus first hit. This was no doubt because most consumers were homebound amidst lockdowns. We saw this trend continue well throughout the past year culminating in a massive spike in retail sales from the top retail stocks in the stock market.
We only need to look at the recent fiscal report from Target (NYSE: TGT) and Walmart (NYSE: WMT) to know that the shopping boom isn’t fading. Both companies reported robust growth in grocery sales and e-commerce growth. Of course, they are not as exciting as companies with the latest technologies or newest breakthroughs in the medical space. However, if you’re looking for slow and steady investments, it’s time to pay closer attention to some of the biggest names in the retail space.
Are Retail Stocks The Right Investment For You?
The COVID-19 pandemic has changed the retail industry drastically. With some retailers scrambling to bolster their e-commerce efforts and some others deciding to shut their doors for good, picking the best retail stocks to buy can be confusing for some. It may seem like an unpredictable time to invest, but with proper planning and research, an investment in some of the top retail stocks could be lucrative. For instance, Target has seen its stock price nearly doubled in the past year.
Maybe you’ve shopped in these retail stores many times without even thinking of the investment possibilities. I don’t blame you for that. Of course, just because you like shopping at a particular store doesn’t make it a good investment. After all, we may develop feelings of attachment for the familiar. And that can cloud our judgment when assessing investment opportunities. Considering many of the retailers have seen significant growth in their e-commerce sales throughout the pandemic, it wouldn’t hurt to put up a list of top retail stocks to watch in the stock market today.
Top Retail Stocks To Watch This Week
- Best Buy Company Inc. (NYSE: BBY)
- Dollar General Corp. (NYSE: DG)
- Costco Wholesale Corp. (NASDAQ: COST)
Best Buy is a leading multinational consumer electronics retailer headquartered in Richfield, Minnesota. In detail, the company specializes in the retail of consumer electronics, home-office products, and appliances. Not to mention, the company has over 1,000 stores across the U.S., Canada, and Mexico. In addition to that, Best Buy also claims that 70% of the U.S. population lives within 15 minutes of one of its stores. The company also benefited from remote work and online school trends during the pandemic.
From its fourth-quarter fiscal report, revenues came in 11.5% higher year-over-year to $16.94 billion, beating Wall Street’s estimates of $15.27. Upon closer inspection, the company saw growth in both its domestic and international segments throughout the financial year as well. Moreover, Best Buy’s online sales revenue skyrocketed by almost 90% throughout the quarter to a record $6.7 billion and made up 43% of their total domestic sales. The electronic retailer will be publishing its first-quarter earnings before the market opens on May 27.
The company’s fourth-quarter was impressive considering the pandemic’s disruption. Given the fact that many turn to Best Buy to upgrade their home office, or to snag up the PS5 for the summer, it’s not surprising if the company continues to post strong growth in its first quarter. Despite a less upbeat outlook by many analysts, the rising sales of TVs and home appliances, which are supported by higher new home sales, might just help Best Buy beat those conservative expectations. Would all these make it a good time to buy BBY stock?
Next, we will be looking at the variety store company Dollar General. For the uninitiated, the massive retail chain operator offers daily necessities in stores across the U.S. at everyday low prices. Even if you’re not a regular shopper in this store, you’re likely familiar with the company. Dollar General operates over 17,266 stores in the U.S. Notably, this far exceeds the combined total U.S. stores of Target and Walmart.
From its fourth-quarter results, the company’s revenue came in 17.6% higher to $8.41 billion. Given that its brick-and-mortar operations continue to be impacted by the pandemic, Dollar General remains resilient. On that note, the company issued a somewhat conservative outlook for the fiscal year 2021 citing a flat net sales movement. Despite that, Dollar General managed to increase its quarterly dividend by 17% besides establishing a $2 billion stock buyback program. Similar to Best Buy, Dollar General is also reporting its quarterly earnings on May 27 before the market opens.
It’s no secret that the pandemic has sped up growth at many food retailers. But perhaps no retailer has benefited more from pandemic-related consumer behavior trends than Dollar General. The company has shown it does well in various economic environments. In fact, its discounter stores were certainly able to attract a good number of customers during tough times. With all these in mind, is DG stock a buy ahead of its earnings this week?
Costco is a multinational corporation that operates a chain of membership-only retail stores. As of 2020, the company is the fifth-largest retailer in the world and the world’s largest retailer of choice and prime beef. Impressively, it is also ranked #10 on the Fortune 500 rankings of the largest U.S. corporations by total revenue. Amidst the pandemic last year, Costco was deemed essential for obvious reasons. As consumers stocked up on essentials, the company came out from 2020 as one of the biggest winners in retail. My point is though, quality businesses like Costco don’t come cheap. But the question here is, is it worth it’s premium?
From its most recent quarter, net income for the quarter was $951 million while earnings per share were $2.14. Its e-commerce segment for the quarter was up by 75.8% and contributed to this impressive quarter. Total revenue for the quarter was $44.76 billion, a 14.5% increase year-over-year. The company will be releasing its upcoming earnings report after the market closes on May 27.
Analysts are forecasting the company to achieve revenue of $43.63 billion and earnings per share of $2.32. These figures translate to increases of 17.5% and 22.7% respectively. Should the results turn out to be as expected, it would be another solid quarter for the retailer. Given how the company is a clear leader in retail, will you consider adding COST stock to your watchlist?