Up And Coming Stocks To Watch As The Economy Continues To Reopen
With the current wave of shoppers returning to stores, I could see retail stocks being in the spotlight now. Arguably, they could even be among the most active stocks today in the stock market. Sure, this would be thanks to the economy reopening and more of the population getting vaccinated. If that wasn’t enough, some retailers are seeing persisting consumer trends even as we approach the tail-end of the pandemic. Dick’s Sporting Goods (NYSE: DKS) CEO Lauren Hobart recently highlighted that people may be permanently embracing active, outdoor hobbies initiated during lockdowns. Hobart believes that this fundamental shift in consumer spending will continue to boost Dick’s financial performance for the current fiscal year.
Indeed, this appears to be the case for numerous conventional retailers right now. However, bears would argue that consumer-focused stocks would come under fire now as inflation rates continue to soar. Could this neutralize the current spending spree we are seeing in the industry? Not quite. In a recent interview with CNBC’s Jim Cramer, Albertsons (NYSE: ACI) CEO Vivek Sankaran explains this. Sankaran notes that while inflation is higher, “it’s happening in an environment where the consumer is really strong. We haven’t seen the consumer affected yet by that level of inflation.” In theory, with supposedly strong consumer spending power, we could be looking at further gains in the retail industry.
To point out, even institutional investors seem to believe so. Yesterday, analysts from Jefferies Financial Group (NYSE: JEF) added Amazon (NASDAQ: AMZN) to its franchise picks list. Notably, JEF cited increasing e-commerce adoption as a core reason for this shift. With such momentum behind the current retail industry trends, you might be considering retail stocks yourself. If you are, here are three to know in the stock market today.
Best Retail Stocks To Watch Today
Right off the bat, we will be looking at global leading sports retailer, Nike Inc. The company boasts a wide array of retail offerings ranging from footwear, apparel, equipment, and accessories. The likes of which are endorsed and used by world-class athletes. With the current boom in retail spending, consumers could be turning to Nike now. Similarly, I could see investors doing the same with NKE stock now.
Evidently, analysts from Morgan Stanley (NYSE: MS) recently provided a rosy update on NKE stock. The firm hit NKE stock with an Overweight rating and bumped its price target up to $185 from $172. Impressively, this marks a 43% premium over its current price of $128.92 as of Thursday’s closing bell this week. According to MS, two key factors contribute to Nike’s long-term growth potential now. The first would be the company’s current “transition from a wholesaler to a DTC (Direct-To-Consumer) brand”. Moreover, MS analysts also believe that Nike is well-positioned to benefit from global consumer activewear. With an “industry-leading balance sheet” on top of all that, MS appears keen on NKE stock now.
Not to mention, the company also saw green across the board in its latest quarter fiscal posted back in March. In it, Nike raked in total revenue of $10.36 billion for the quarter. Following that, it also reported solid year-over-year gains of 71% in net income and 69% in earnings per share. Given all of this, will you be watching NKE stock ahead of its fourth-quarter fiscal results released on June 24?
Another top name in the retail space to note now would be Shopify Inc. In brief, the Canadian e-commerce titan would be a go-to for investors looking to bet on digital shopping trends now. Understandably, this is because Shopify essentially serves to help retailers go digital via its e-commerce platform and retail point-of-sale systems. Today, the company’s platform is home to over 1.7 million businesses from 175 countries across the globe. Sure, some would believe that the e-commerce train would lose momentum post-pandemic. But, SHOP stock is currently looking at gains of over 32% year-to-date now. Could this mean that it has more room to run moving forward?
Well, for one thing, Shopify does not seem to be slowing down anytime soon on the operational front. Just this week, the company provided investors with a massive update. Notably, Shopify is planning to extend its one-click checkout service, Shop Pay, to all U.S. merchants on Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL). For starters, this move is a rather strategic play by the company, to say the least. By collaborating with these tech giants, the company would be extending its market reach significantly. Also, this would mark the first Shopify product being offered to non-Shopify merchants, possibly diversifying its streams of revenue.
By and large, Shopify appears to be making the most of its pandemic-fueled growth right now. While time will tell if the e-commerce industry can maintain its current momentum, Shopify seems to be kicking into high gear, regardless. Could all this make SHOP stock a top watch for you now?
L Brands Inc.
Next, we have leading fashion and lifestyle apparel retailer L Brands. For the most part, consumers and investors alike are more likely to know its flagship divisions. These are the Victoria’s Secret and Bath & Body Works brands. In terms of scale, L Brands operates via more than 2,600 specialty stores across the U.S., Canada, and Greater China. Additionally, the company’s brands are marketed in over 700 franchised locations worldwide. More importantly, LB stock is currently looking at gains of over 300% in the past year.
On the financial front, L Brands reported stellar figures in its recent quarter fiscal posted last month. In detail, the company saw an 82% surge in total revenue, adding up to $3.02 billion for the quarter. Furthermore, it also saw massive year-over-year jumps of 193% in net income and 190% in earnings per share. Overall, it was a record first-quarter for the company, to say the least. CEO Andrew Meslow cites “continued strength and exceptional performance at Bath & Body Works and Victoria’s Secret” as growth drivers for the quarter.
Now, it is currently looking to spin off both the Victoria’s Secret and Bath & Body Work divisions into two separate publicly traded companies. If anything, this would give L Brands the chance to dedicate more to build on the newfound momentum across both sections. Ideally, the newly separated companies will be able to better refine their businesses, chasing growth opportunities with dedicated teams. All in all, will you be adding LB stock to your watchlist?