4 Retail Stocks To Your Rescue As Coronavirus Rattles Market

An edgy stock market — thanks to deepening fears over the novel coronavirus — was further spooked by Saudi Arabia and Russia’s failure to reach a consensus over output cut, which resulted in the collapse of crude oil prices. These provided enough ammunition to the bears in the market that triggered a massive selloff amid fears of an economic recession. The Dow Jones, the S&P 500 and the Nasdaq have slid roughly 14.6%, 13.4% and 13.3%, respectively, in a month’s time.

Nonetheless, every possible measure is being taken to soothe investors. Recently, President Trump announced “a possible tax relief measure” that followed an $8.3-billion spending package to facilitate medical research on vaccines for the epidemic. Earlier, the Federal Reserve trimmed the benchmark interest rate by 0.5% to the range of 1-1.25%. Clearly, these measures are aimed at arresting the market mayhem caused by the deadly virus.

In fact, falling interest rates, lower gasoline prices and any tax reliefs are likely to boost consumer spending activity, which remains one of the pivotal factors driving the economy. With consumers feeling confident, retail sales are ought to improve. Markedly, National Retail Federation envisions retail sales (excluding automobiles, restaurants and gasoline) growth of 3.5-4.1% to more than $3.9 trillion in 2020. Online and other non-store sales are expected to grow 12-15% to $870.6-$893.9 billion this year.

Well, consumers are in good shape, courtesy of a solid job market. Given the positive consumer trends in the United States, we believe retail stocks — though hit by the market roils, hold strong long-term fundamentals — present an opportunity. Here, we have zeroed in on four such stocks that could enrich your portfolio despite the COVID-19 outbreak.



4 Prominent Picks

We have shortlisted stocks on the basis of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Value Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here. These stocks have greater possibilities to rise once the effect of the virus moderates.

Investors can count on Macy's, Inc. (NYSE:M) , which sells a range of merchandise, including apparel and accessories. The company is in the process of a complete makeover and has outlined plans under its three-year Polaris Strategy to adapt better to the new retail ecosystem. Notably, the company is banking on Backstage locations, Vendor Direct, Store Pickup, Loyalty Program, Growth150 stores, ‘mobile first’ strategy and Destination Businesses. This Zacks Rank #1 company has a long-term earnings growth rate of 7.5% and a Value Score of A. It has a trailing four-quarter positive earnings surprise of 153.2%, on average. The Zacks Consensus Estimate for its current financial year earnings has moved up 1.6% in the past 30 days.

The Buckle, Inc. (NYSE:BKE) , a retailer of casual apparel, footwear, and accessories, is a solid bet with a Zacks Rank #1 and a Value Score of B. The company has a trailing four-quarter positive earnings surprise of 2.5%, on average. The company is on track with efforts such as enhancing marketing efficiency, store remodeling and technology upgrades. We note that comparable store net sales for the month of February rose 6.3%, recording the third straight month of improvement.

We also suggest investing in Signet Jewelers Limited (NYSE:SIG) , with a long-term earnings growth rate of 8%. The company is benefitting from its ‘Signet Path to Brilliance’ plan, which is designed to augment savings, engage in customer-centric growth and bolster e-commerce. Focus on cost-containment efforts, omni-channel initiatives, product innovation and inventory management also bodes well. The stock has a Zacks Rank #1 and a Value Score of B. This jewelry retailer has a trailing four-quarter positive earnings surprise of 65.9%, on average. Additionally, the Zacks Consensus Estimate for its current financial year earnings has moved 12% north in the past 60 days.

Another stock worth considering is Zumiez Inc. (NASDAQ:ZUMZ) , which has a long-term earnings growth rate of 12%. The company has been benefiting from differentiated assortments, store expansion and strategic investments. Also, it has been expanding e-commerce and omnichannel capabilities to provide consumers with quick and easy access to products. This specialty retailer of apparel, footwear, accessories has a trailing four-quarter positive earnings surprise of 64.1%, on average. The stock has a Zacks Rank #2 and a Value Score of B. The Zacks Consensus Estimate for its current financial year earnings has climbed nearly 2.5% in the past 60 days.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Signet Jewelers Limited (SIG): Free Stock Analysis Report

Zumiez Inc. (ZUMZ): Free Stock Analysis Report

Macy's, Inc. (M): Free Stock Analysis Report

Buckle, Inc. (The) (BKE): Free Stock Analysis Report

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