Retail-Wholesale, which typically performs well in a maturing economic cycle, is among the sectors that are likely to steal the show this reporting season. The sector, in fact, hogs all the attention with the advent of the holiday season. It is time to lift your spirits by adding potential winners to your portfolio with stocks that are likely to trump all odds and stand out with great earnings surprises.
The sector is anticipated to witness bottom-line growth of 23%, while top-line is anticipated to increase 6.1%, per the latest Earnings Preview. Notably, the sector has advanced roughly 14% in a year outpacing the S&P 500’s growth of approximately 8%. The underlying economic strength backed by robust job market, latest tax reform and pro-business policies are acting as catalysts to the sector.
Needless to say, the aforementioned factors play a vital role in elevating consumer confidence, enhancing prospects for retailers. Americans are way more confident now, brushing aside recent hiccups like the U.S.-China trade war. Fall in the number of people claiming unemployment benefits and jobless rate hovering at a 49-year low also foreshadow the same. For obvious reasons, upbeat sentiment is likely to translate into higher consumer spending.
Considering these bullish aspects, industry experts believe that retailers may clink glasses to great holiday sales. Data compiled by the nation’s largest retail trade group, National Retail Federation, anticipates a rise of 4.3-4.8% in November and December sales (excluding autos, gas, and restaurant) to $717.45-$720.89 billion. So, start filling your holiday hampers by picking stocks that have a fair chance to outperform.
How to Pick Prospective Winners for the Season
All said, we used the Zacks methodology and identified retail stocks that are poised to beat earnings estimates this reporting cycle. Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
