3 Discount Retail Stocks Hit 52-Week High: More Room Ahead?

The Retail-Discount industry has portrayed a solid bull run in the past six months with its surge of 33.4%, substantially outperforming the S&P 500 index’s growth of 14.4%. Impressively, the industry ranks within the top 22% (56 of 256) of all Zacks industries.

Discount retailers such as Burlington Stores, Inc. (NYSE:BURL) , Dollar General Corporation (NYSE:DG) and Big Lots, Inc. (NYSE:BIG) have managed to stay afloat amid the changing retail landscape. Though the broader Retail sector has been bearing the brunt of heightened online competition, particularly by Amazon.com, Inc. (NASDAQ:AMZN) , we believe the sector is poised well to gain from a buoyant U.S. economy.

Interestingly, these three companies have hit a 52-week high on Jan 23, driven by the upbeat industry trends, solid comparable-store sales (comps) growth and their respective growth strategies. Burlington Stores carries a Zacks Rank #2 (Buy) whereas Dollar General and Big Lots has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

What’s Pushing Burlington Stores’ Shares Higher?

Shares of Burlington Stores hit a 52-week high of $127.43, though it closed lower at $126.74. Overall, the stock has surged a whopping 45.9% in a six-month time frame. The company also looks promising on the back of its robust growth initiatives, solid focus on store-expansion endeavors and impressive surprise history. Notably, it delivered 16th straight quarter of a positive earnings surprise in the third quarter of fiscal 2017. Additionally, the top line outpaced the Zacks Consensus Estimate in five of the trailing seven quarters.

Furthermore, Burlington Stores has made multiple changes to business model in order to adapt to the ongoing transformation in the broader retail sector. In fact, its current open to buy off-price model is helping customers to get nationally branded, fashionable, high quality and fair priced products. As a result, the company has witnessed constant improvement in comps and gross margin over the past few years.

What’s Driving Dollar General’s Shares?

Shares of Dollar General touched a 52-week high of $103.99, though it closed a tad lower at $103.17. Overall, the stock has rallied 40.2% in the past six months. Better price management, solid merchandising initiatives and impressive cost-containment efforts have been boding well for the company. Further, the company’s commitment toward private label offering, effective inventory management and encouraging merchandise as well as operational initiatives, remain noteworthy. In the meantime, Dollar General is expanding its cooler facilities to enhance the sale of perishable items and is also rolling out DG digital coupon program.

While reduction in SNAP benefit raises concerns for the company, its current solid performance remains impressive. Apparently, Dollar General delivered fourth-straight quarter of earnings and sales beat in third-quarter fiscal 2017. Notably, fiscal 2016 was the 27th consecutive year of comps growth for the company, primarily driven by consistent increase in traffic and average transaction value.

What’s Aiding Big Lots’ Performance?

Shares of Big Lots too scaled a 52-week high of $63.09, though it closed slightly lower at $62.25. In the past six months, the stock has advanced 25.6%. Also, the company’s furniture financing programs and soft home have been consistently gaining traction. Impressively, furniture has been the leading performer in the last few quarters and is likely to continue the trend in fiscal 2017. Also, its merchandising strategies and effective marketing seem to be paying off quite well.

However, the company’s gross margin remains under pressure for a while now and is expected to decline year over year in the fourth quarter of fiscal 2017.

Nevertheless, it boasts a robust earnings history as it delivered eighth straight quarter of positive earnings surprise in the last reported quarter. Notably, comps have increased in 13 of the trailing 15 quarters.

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