Are These The Best Retail Stocks To Buy Before Friday?
It goes without saying that most retail stocks have been badly hit due to the coronavirus pandemic. Across the globe, many brick-and-mortar stores had to close throughout March to June. Even as the world pushes forward with the reopening of the economy, it has been a rocky path so far as coronavirus cases continue to climb. Even countries previously declared ‘virus-free’ have seen some resurgence in coronavirus cases. But that doesn’t mean the best retail stocks can’t outperform the broader market.
Many investors would avoid the retail space at all costs amid the uneven reopening economy. Go ahead and call me an optimist, I believe there are still a few companies that could do well despite closure of physical stores. Not all retail stocks are created equal. If we look at Amazon (AMZN Stock Report), we know that the vast majority of its sales are derived from its e-commerce segment, which arguably very much makes it a retail play.
Of course, many of these retailers have seen a surge in online demand. But that surge still makes up a relatively small percentage of total revenue for most traditional retailers. For instance, if we look at Nike (NKE Stock Report) or Under Armour (UA Stock Report), both have dropped 5% and 50% respectively year-to-date. Nike appears close to fully recovering from the effect of the pandemic. On the other hand, UA stocks still have to double its stock price to go back to pre-pandemic levels. Like I said, investors shouldn’t treat all retail stocks equally. With that in mind, here are two retail stocks that could be worth the addition to your portfolio.
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Top Retail Stocks To Buy Or Sell Now: Tupperware Brands Corporation
Tupperware Brands Corp. (TUP Stock Report) surprised their investors with massive earnings during the second quarter. As a result, TUP stocks have skyrocketed more than 65% on Wednesday. In fact, the company was one of the best cheap stocks to buy during the market turmoil in March. Since hitting new lows in March, TUP stocks have been climbing quietly under the radar and have soared more than 1,100%. In just a span of four months.
It is reported that the sales were 16% lower in the second quarter. And for the first half, the sales have fallen 20%. So why is TUP stock having such a massive rally? Glad you asked. As you may have noticed, the company recently has a new management team and a turnaround plan. By improving the overall operational efficiency, Tupperware was able to boost its profit during the second quarter by a lot. Tupperware reported $63.8 million in quarterly net income, which translates to $1.30 in earnings per share (EPS). Analysts were expecting a net EPS loss. So, that explains the massive rally in Tupperware stock for the past few months.
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Top Retail Stocks To Buy Or Sell Now: Lululemon Athletica
Lululemon Athletica (LULU Stock Report) has experienced enormous growth over the years, due to its niche appeal in the athletic space. Also, the company is a more superior consumer stock to own compared to big names like Nike or Adidas. Nike and Adidas have to write off their off seasonal items, whereas Lulu’s apparel are essentially suitable for all seasons. On top of that, Lululemon has also successfully branched out to other categories. They include outerwear, lifestyle and apparel for golf.
More importantly, Lululemon adapted well during store closures in North America and Europe. The direct-to-consumer revenue, including sales through the company’s website surged 68% year over year in the last quarter. When many companies turn to online stores to continue their offering, they would claim that the online spending has “spiked” during the pandemic. But the truth is, it still makes up only a small portion of their total sales. Unlike its industry peers, Lululemon’s e-commerce made up an astonishing 54% of total revenue in the most quarter, up from 28% in fiscal 2019. This is a testimony to the company’s resilience.