5 Stocks to Buy on Impressive October Retail Sales Report

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Retailers are finally breathing easy, with sales accelerating for two straight months. The pandemic had wreaked havoc on the retail sector but things finally seem to be changing.

– Zacks

With the holiday season just about to begin, retail sales are further likely to get a boost. This is likely to help stocks likeBoot Barn Holdings, Inc. BOOT, Tapestry, Inc. TPR, Capri HoldingsCPRI, Macy’s, Inc. M and Best Buy Co., Inc. BBY in the near term.

Retail Sales Jump in October

Retail sales rose 1.7% in October on a month-over-month basis, beating analysts’ expectations of 1.5%, the Census Bureau said on Nov 16. Excluding autos, sales grew 1.4% in October. The estimates were 1% for core sales growth.

October’s jump follows a 0.8% increase in September. Consumer spending makes up two-thirds of all U.S. economic activity and is watched closely to gauge the country’s economic health.

Retail sales jumped after it was reported last week that the consumer price index rose 0.9% for October and 6.2% year over year, hitting a 30-year high.

However, even though prices have been skyrocketing, people are aggressively spending on goods. This is acting as a catalyst for the retail sector.

People Spending More on Goods

Last year,the retail sector took a massive hit. However, things started changing this year, following the massive vaccination drive,which saw the economy reopening faster than expected.

Since then, people have been spending more on goods,helping retailers. Also, U.S. households have managed to save huge cash after receiving multiple rounds of coronavirus stimulus that Congress had approved.

The massive stimulus totaled over $5 trillion,including direct payments via checks that reached millions of Americans. U.S. households amassed a massive $1.6 trillion in savings in just the third quarter.

This saw people spending more on goods. For October, sales of electronics and appliances jumped 3.8%. Sales at restaurants jumped 29.3% year over year, while apparel increased 25.8% year over year.

Moreover, with the holiday season approaching, sales are further likely to increase. Holiday sales this year are predicted to hit a record high, which will add to the confidence of the retailers.

Our Choices

The jump in retail sales in October once again signals a steady recovery. Retail sales in October hit the highest level since March. Given this scenario, investing in retail stocks with a strong online presence would be ideal. We have hand-picked five for you. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. Boot Barn Holdings’ products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories.

The expected earnings growth rate for the current year is more than 100% for Boot Barn Holdings. The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the past 60 days. Shares of BOOT have gained 30.1% in the past 30 days. BOOT carries a Zacks Rank #1.

Tapestry, Inc. is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR offers lifestyle products, which include handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches. 

Tapestry reported stronger-than-expected first-quarter fiscal 2022 earnings, thanks to robust demand and strong customer engagement. TPR posted first-quarter adjusted earnings of 82 cents a share, beating the Zacks Consensus Estimate of 69 cents.

Zacks Rank #1 Tapestry’s expected earnings growth rate for the current year is 17.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. TPR shares have advanced 16.9% in the past 30 days.

Capri Holdings provides women’s and men’s accessories, footwear and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. Capri Holdings operates in the global personal luxury goods industry, which has been severely impacted by the coronavirus outbreak.

Capri Holdings had an impressive last quarter. CPRI reported second-quarter fiscal 2022 adjusted earnings of $1.53 per share, beating the Zacks Consensus Estimates of 95 cents.

Capri Holdings’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 17.7% over the past 60 days. CPRI’s shares have advanced 27.1% in the past 30 days. Capri Holdings sports a Zacks Rank #1.

Macy’s, Inc. 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, Macy’s is banking on Backstage locations, Vendor Direct, Store Pickup, Loyalty Program, Growth150 stores, the mobile first strategy and Destination Businesses. 

Macy’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the past 60 days. M’s shares have advanced 33% in the past 30 days. Macy’s has a Zacks Rank #2.

Best Buy Co., Inc. is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services. Best Buy operates through two business segments.

The Domestic Segment of BBY comprises operations, including Best Buy Health business, in all states, districts and territories of the United States under various brand names Best Buy, Best Buy Business, Best Buy Express, Best Buy Health, CST, Geek Squad, GreatCall, Lively, Magnolia and Pacific Kitchen and Home. The International Segment of BBY (7% of Q2FY22 total revenues) comprises operations in Canada under the brand names Best Buy, Best Buy Express, Best Buy Mobile and Geek Squad.

BBY’s expected earnings growth rate for next year is 26.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. BBY shares have gained 18.5% in the last 30 days. Best Buy has a Zacks Rank #2.

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