Are These Top Retail Stocks Worth Investing In Ahead Of May 2021?
It would not surprise me to see that retail stocks are among the most active stocks in the stock market today. For the most part, this would be thanks to investor optimism on retail businesses booming in a post-pandemic world. To begin with, as vaccination rates continue to increase, consumers would feel more comfortable going out. This would help boost brick-and-mortar store sales figures for retail players across the board. At the same time, consumer spending remains healthy on account of the latest round of stimulus checks. Given all of this, I can imagine that investors are actively looking for the best retail stocks to buy in the market now.
Meanwhile, some of the largest names in the retail industry are in focus during this earnings season. Take Shopify (NYSE: SHOP) for example. Notably, Shopify reported stellar figures across the board in its recent quarter fiscal yesterday. The company saw revenue more than double compared to the same quarter last year. Elsewhere, investors could also be eyeing e-commerce craft supplies giant Etsy (NASDAQ: ETSY) which will be reporting earnings next week. Indeed, the demand for e-commerce is now propelling these retail names forward. The real question now is whether consumer demands will remain at these levels as retailers attempt to navigate the post-pandemic market. Nevertheless, could one of these hot retail stocks in the stock market be worth noting now?
Top Retail Stocks To Buy [Or Avoid] Now
- Costco Wholesale Corporation (NASDAQ: COST)
- Overstock.com Inc. (NASDAQ: OSTK)
- Target Corporation (NYSE: TGT)
- L Brands Inc. (NYSE: LB)
Costco Corporation
Costco is a multinational corporation that operates a chain of membership-only retail stores. As of 2020, the company is the fifth-largest retailer in the world and the world’s largest retailer of choice and prime beef. Impressively, it is also ranked #10 on the Fortune 500 rankings of the largest U.S. corporations by total revenue. COST stock currently trades at $373.56 going into Thursday’s closing bell and is up by over 10% since the start of March. Amidst the pandemic last year, Costco was deemed essential for obvious reasons. As consumers stocked up on essentials, the company came out from 2020 as one of the biggest winners in retail.
Last month, the company reported its second-quarter financials for fiscal 2021. In it, the company reported that net income for the quarter was $951 million or earnings per share of $2.14. Its e-commerce segment for the quarter was up by 75.8% and contributed to this impressive quarter. Total revenue for the quarter was $44.76 billion, a 14.5% increase year-over-year. Earlier this month, the company also announced a quarterly cash dividend of $0.79 per share. Given how the company is a clear leader in retail, will you consider buying COST stock?
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Overstock.com
Overstock is an online retailer and technology company that is based in Salt Lake City, Utah. The company sells a broad range of new home products at low prices, including furniture, décor, bedding, and home improvement among others. Impressively, its online shopping site is visited by tens of millions of customers every month. Its website also provides a marketplace to provide customers access to millions of products from third-party sellers. OSTK stock currently trades at $74.53 as of 3:50 p.m. ET and is up by over 5% during Thursday’s power hour session. Investors seem to be responding to the company’s first-quarter 2021 financial results that were reported today.
In it, Overstock posted net revenue of $660 million, a 94% increase year-over-year. Gross profit for the quarter was $154 million or 23.3% of total net revenue. The company also reported a diluted earnings per share of $0.56. Overstock also reported that it ended the quarter with $535 million in cash. Operational highlights include a 92% increase in active customers year-over-year to 9.9 million. It also made 3.6 million orders during the first quarter, an increase of 66% year-over-year. Given the growth that the company is currently enjoying, will you consider adding OSTK to your portfolio?
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Target Corporation
Target is a retail corporation that is one of the largest retailers in the U.S. The company has stores in all 50 U.S. states and employs over 350,000 team members. It claims that 75% of the U.S. population lives within 10 miles of a Target store, so it has a wide audience on paper. Its general merchandise stores offer food assortment, dairy, and frozen items while its digital channels include a range of general merchandise. TGT stock currently trades at $207.37 as of 3:51 p.m. ET and has been up by over 80% in the last year.
Last month, the company reported its fourth-quarter and full-year 2020 financials. Firstly, the company posted a total revenue of $28.3 billion, a 21.1% increase year-over-year. Comparable sales grew by 20.5%, reflecting comparable traffic growth of 6.5%. Its digital comparable sales grew by a whopping 118%, accounting for two-thirds of the company’s overall comparable growth. Target also posted an earnings per share of $2.73 for the quarter as it continues to gain market share across all five of its core merchandising categories. With that in mind, will you consider buying TGT stock?
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L Brands Inc.
L Brands is a fashion retailer that is based in Ohio. Its flagship products include Victoria’s Secret and Bath & Body Works. It operates over 2,500 specialty stores in the U.S., Canada, and Greater China in more than 700 franchised locations worldwide and through its websites. LB stock currently trades at $66.73 as of 3:52 p.m. ET and is up by over 400% in the last year.
Last month, the company increased its first-quarter earnings guidance due to improved sales trends. This seems to result from government stimulus payments and relaxation of coronavirus restrictions and other factors. L Brands is now expecting topline earnings per share of $1.00 versus its previous topline of $0.65.
In February, the company reported its fourth-quarter financials. Operating income for the quarter was $1.273 billion and net income was $860.3 million. On an adjusted basis, the company reported an earnings per share increase of 61% to $3.03. Impressively, its Victoria’s Secret operating income doubled to $403.4 million. With such impressive financials, is LB stock worth buying?
