- (0:35) – Finding Hot Retail Stocks For Your Portfolio
- (4:00) – Will Black Friday Help or Hurt Retailers This Year: What To Expect
- (8:45) – Is It Too Late To Invest In Retailers Near All Time Highs?
- (16:40) – How Will Back Orders And Delayed Shipping Impact Retailers?
- (21:30) – Will The Pandemic Stock Winners Continue Their Growth?
- (32:00) – Top Stock Picks: Cheap Retail Stocks Poised For Growth
- (40:25) – Retail Stocks That Might Want To Avoid
- (47:10) – Episode Roundup: LULU, LEVI, AEO, M, RVLV, URBN, ANF, CHS, JWN, TGT, ULTA, DECK, NKE, GPS, DKS, WSM, KSS
Welcome to Episode #293 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey talks with Zacks Associate Stock Strategist, and the Editor of Zacks Income Investor Portfolio, Maddy Johnson, about the hot retail industry.
You know the hot names: Lululemon, Macy’s, Target, American Eagle Outfitters and Levi Strauss.
Black Friday and Cyber Monday are fast approaching but many retailers have already launched their holiday sales, including department stores. Apparel is one of the hottest items as consumers head back-to-work and out to parties for the first time in nearly 2 years.
Retailers are reporting that women’s party dresses are one of the hottest categories. And, of course, athleisure, including yoga pants and joggers, remain in high demand.
Which Retail Stocks to Buy Right Now?
1. Lululemon LULU
Lululemon, which Tracey owns in her own personal portfolio, continues to be the leader in athleisure.
Lululemon is still the first retailer of choice for yoga pants, but women’s tops and men’s clothing are up and coming growing categories.
Shares are near all-time highs, up 31% year-to-date.
Lululemon isn’t for value investors, as it trades with a forward P/E of 61. But Lululemon’s sales are expected to rise 42% this fiscal year and another 17% in fiscal 2023.
Will it have its best holiday season ever, or will COVID and supply chain disruptions ruin the party?
2. Macy’s M
Macy’s recently surprised with an outstanding third quarter and strong guidance for the upcoming holiday season.
Weren’t department stores supposed to be dead?
Macy’s shares have soared 198% year-to-date but aren’t even back to 5-year highs.
Macy’s is also cheap, with a forward P/E of just 7.5. Sales are expected to soar 39.5% this year but analysts are unsure about fiscal 2023, with sales expected to fall about 1%.
But the focus is on this year, and this holiday season.
Is it time to get on board the Macy’s train?
3. Target TGT
Target is one of Maddy’s favorite retailers. She owns it in the Income Investor portfolio and her own personal portfolio.
It recently beat the Zacks Consensus Estimate for the 12th quarter in a row.
Target shares have been hitting 5-year highs this year, gaining 41%.
Target’s sales are expected to rise 14% in fiscal 2022 and another 2.4% in fiscal 2023.
It trades with a forward P/E of 18.6 and is shareholder friendly, with a dividend of 1.4%.
Target is a Zacks Rank #2 (Buy) stock.
Is it time to buy one of the industry’s biggest winners?
4. American Eagle Outfitters AEO
American Eagle Outfitters recently reported a record fiscal third quarter, with revenue up 24% year-over-year.
It has two powerful brands: American Eagle, which saw revenue jump 21%, and Aerie, which saw a 28% revenue gain.
Even with inflationary pressures, American Eagle Outfitters saw gross margins rise 410 basis points to 44.3%, the highest level since 2007.
While shares have gained 43% year-to-date, over the last 3 months, they’ve retreated 11%.
American Eagle Outfitters trades with a forward P/E of just 12.5.
Is this weakness in the shares a buying opportunity in American Eagle Outfitters?
5. Levi Strauss & Company LEVI
Levi Strauss in at the epicenter of one of the hottest apparel trends: denim.
Forget those skinny jeans, straight and wide legs are in and Levi’s has got them.
Sales are expected to rise 29% in fiscal 2021 and another 11% in fiscal 2022.
Like other apparel retailers, shares of Levi Strauss have out performed in 2021, gaining 39%.
It trades with a forward P/E of 19.6.
Levi Strauss has been in business since 1853. Denim has never gone out of style.
Is 2021 the time to buy this Zacks Rank #2 (Buy) stock?
Which Retail Stocks Do Tracey and Maddy Not Like?
In addition to their favorite retail stocks, Tracey and Maddy also talked about a few retailers that they’re not fans of right now.
Find out which stocks those are and everything else you need to know about the retail industry on this week’s podcast.
For more headline-fueled trades and insight, checkout my daily market commentary of the Headline Trader portfolio.
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Macy’s, Inc. (M): Free Stock Analysis Report
Target Corporation (TGT): Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO): Free Stock Analysis Report
lululemon athletica inc. (LULU): Free Stock Analysis Report
Levi Strauss & Co. (LEVI): Free Stock Analysis Report
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