3 Retail Stocks to Buy After Strong Black Friday Weekend
The holiday shopping season kicked off in earnest last week, as shoppers poured into stores and filled up their online carts in droves. In total, more than 174 million Americans shopped in stores or online during the holiday weekend, which spilled over through Cyber Monday.
This year’s total topped the National Retail Federation’s estimates by 10 million. On top of that, the average shopper spent $333.47 over the five-day shopping bonanza. Many retailers likely relished the successful weekend that was bolstered by a few factors completely out of their control.
“From good weather across the country to low unemployment and strong consumer confidence, the climate was right, literally and figuratively, for consumers to tackle their holiday shopping lists online and in stores,” NRF CEO Matthew Shay said in a statement.
This strong performance will not necessarily carry over into December or lead directly to a strong overall holiday shopping season. However, the NRF noted on Tuesday that the firm still expects total retail sales—excluding automobiles, gasoline, and restaurants—for November and December to hit $682 billion, which would mark 4% growth.
With all that said, let’s take a look at three retailers that could benefit from this uptick in holiday shopping that also currently sport great Zacks Ranks.
Urban Outfitters, Inc. URBN
Just last week, this clothing and apparel retailer topped our Zacks Consensus Estimates for Q3 earnings by 24.24%. Urban Outfitters, which also owns Anthropologie and Free People, is currently a Zacks Rank #1 (Strong Buy) and sports an “A” VGM score.
The company’s “A” grade for Value in our Style Scores system is backed up by its 0.93 P/S ratio and P/B ratio of 2.58. What’s more, Urban is currently trading at 19.71x earnings, which helps demonstrate its value.
Based on our current Zacks Consensus Estimates, the company’s fourth-quarter sales are expected to gain 4.78% to hit $1.08 billion. Furthermore, Urban’s Q4 earnings are projected to jump 10.07% year-over-year.
Urban has seen its stock price surge 45% in the last 12 weeks as the company picks up steam, helping it earn an “A” for Momentum in our Style Scores system. And within the last 60 days, the company has received 10 upward earnings estimates revisions for its fourth-quarter, against just one downgrade.
American Eagle Outfitters, Inc. AEO
This clothing retailer, which has been a staple at American malls for years, is currently a Zacks Rank #2 (Buy) and sports an overall VGM Grade of an “A.”
For its upcoming third-quarter, American Eagle’s sales are projected to climb 2.57% to hit $964.78 million, based on our current consensus estimates. For the full-year, the company’s sales are projected to climb 3.13% to reach as high as $3.78 billion.
American Eagle also boasts an “A” grade for Value in our Style Scores system. This is supported by the company’s current 0.73 P/S ratio, as well as its P/B ratio of 2.38. What’s more, American Eagle is trading at 13.33x earnings, which marks a discount compared to its industry’s average and fairs well against the S&P 500.
The youth-focused retailer also rocks a “B” grade for Momentum. In the last four weeks alone, shares of American Eagle have surged 15.10%. Still, even with this positive momentum, shares of
American Eagle rest around 15% below their 52-week high. Therefore, the retailer still has room to climb without the added burden of having to break into a new range.
Lastly, American Eagle has missed earnings estimates just once since the start of 2013.
Skechers U.S.A., Inc. SKX
This shoe brand and retailer known mostly for its low prices is currently a Zacks Rank 1# (Strong Buy). Based on our consensus estimates, Skechers’ fourth-quarter earnings are projected to skyrocket 225%, while its Q4 sales are set to surge 15.82%. For the full-year, the company’s EPS are expected to climb 8.60%. What’s more, Skechers’ full-year revenues are projected to pop 13.70% to reach $4.05 billion.
Skechers hired a new CFO in mid-November, which allowed David Weinberg to focus his attention on his COO duties after he spent time filling both roles. The move will reportedly allow the company to focus on its global expansion.
Over the last 12-weeks, shares of Skechers climbed 29.68%. Since the start of the year, the low-cost shoe retailer’s stock price has climbed 41.13%, which crushes its industry’s average and blows the S&P 500’s 12.94% gain out of the water. The company now hovers right around its 52-week high of $34.95 per share.
However, it should not be too hard for the company to break into a new range as Skechers has earned four full-year upward earnings estimates revisions against no downgrades, all within the last 60 days.
Finally, Skechers has a respectable price to book ratio of 2.70 and a solid 1.39 P/S ratio. On top of that, the company is currently trading at 20.35x earnings.
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