5 Retail Stocks To Buy On Trump-Induced Confidence

Not only is the “Trump Factor” ruling the U.S. stock market but is also boosting consumer confidence. Customers are more optimistic about the future prospects of the economy under Donald Trump’s regime. Although subdued November retail sales and consumer spending data raised some concerns, experts believe it to be a temporary affair, given other encouraging economic indicators.

Consumer Confidence – a key determinant of the economy’s health – improved significantly in December, reaching its highest level since Aug 2001. This clearly indicates that consumers have given thumbs up to Trump’s revolutionary ideas as well as the recent increase in the benchmark interest rate. However, there are reservations over indications of harsh trade policies and imposition of tariffs on imports.

According to the recent Conference Board data, the Consumer Confidence Index increased to 113.7 in December from the November reading of 109.4. Industry experts believe that still lower gasoline prices, an improving job picture and higher income prospects may have acted as catalysts in boosting consumer sentiment. A rebounding economy sounds good for retailers.

The U.S. economy is largely healed and has enough steam to sustain the momentum in 2017. The economy expanded at a much faster pace than expected between July and September. The economy recorded GDP growth of 3.5% in the third quarter that was better than the second and first estimates of 3.2% and 2.9% growth, respectively and the second-quarter anemic increase of 1.4%, buoyed by stronger consumer spending that rose 3%.

5 Prominent Picks

Undoubtedly, the retail sector presents itself as a lucrative investment hub amid the current economic scenario. Here we have highlighted five Retail/Wholesale stocks that are ready to ride on the confidence exuded by the economy. These have a favorable combination of a Zacks Rank #1 (Strong Buy) with a VGM Score of “A” or “B.”

We suggest investing in The Children's Place, Inc. (NASDAQ:PLCE) , with a long-term earnings growth rate of 10.3% and a VGM Score of “A.” In the past six months, the stock has surged roughly 30.7% and outperformed the Zacks categorized Retail-Apparel/Shoe industry, which gained 6.4%.

This specialty retailer of children's apparel delivered an average positive earnings surprise of 36.3% over the trailing four quarters and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors can count on Big 5 Sporting Goods Corporation (NASDAQ:BGFV) , a sporting goods retailer with a long-term earnings growth rate of 12% and a Zacks Rank #1. The company posted an average positive earnings surprise of 4.8% over the trailing four quarters and has a VGM Score of “A." In the past six months, the stock has exhibited a bullish run and surged 94.4%, while the Zacks categorized Retail-Miscellaneous/Diversified industry inched up 0.7%.

Burlington Stores, Inc. (NYSE:BURL) , a retailer of branded apparel products, is a solid bet, with a Zacks Rank #1 and a VGM Score of “B.” The company posted an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%. The stock has surged 32.2% in the past six months and comfortably outperformed the Zacks categorized Retail-Discount & Variety industry, which increased only 0.4%.

We suggest investing in Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) , which has a long-term earnings growth rate of 17.4% and a VGM Score of “B.” This owner and operator of entertainment and dining venues delivered an average positive earnings surprise of 37.8% in the trailing four quarters and carries a Zacks Rank #1. We note that in the past six months, the stock has advanced approximately 22.5%, while the Zacks categorized Retail-Food & Restaurants industry has shown an increase of 1.7%.

You may also consider Tilly's, Inc. (NYSE:TLYS) , a retailer of casual apparel, footwear, and accessories. The stock sports a Zacks Rank #1 and has a VGM Score of “B." The company posted an average positive earnings surprise of 98% in the trailing four quarters and has a long-term earnings growth rate of 13%. In the past six months, the stock has displayed a fabulous bull run on the index and has risen over 100%, while the Zacks categorized Retail-Apparel/Shoe industry increased just 6.4%.

Endnote

These five stocks are not the only ones to bet on. With the help of the Zacks Stock Screener and some permutation and combination, you can find out other stocks that have the potential to beat the market.

Zacks' Top 10 Stocks for 2017

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