Are These The Best Retail Stocks To Buy Before October 2020?
September 25, 2020 at 16:00 PM EDT
Will You Have These Retail Stocks On Your List Next Week?
Retail stocks have been one of the hardest hit in the stock market. The coronavirus pandemic has created an unprecedented crisis that brought the U.S. economy to its knees. But some of the top retail stocks, once dogged by fears of those changes, have become attractive buys once again.
The retail industry, as represented by the SPDR S&P Retail ETF (XRT Stock Report), has outperformed the broader market. Since the stock market crash earlier this year in March, the retail index has climbed more than 90%. However, not all are performing that well. In fact, some of the famous retail brands have already filed for bankruptcy protection. That includes Tailored Brands (TLRD Stock Report) and JC Penney Company (JCPNQ Stock Report).
While the global health crisis has put severe financial strains on the weaker retailers, those that have been thriving would be able to grow out stronger. You would have seen shares of Amazon (AMZN Stock Report) and JD.com (JD Stock Report) move higher throughout the pandemic. And that is not surprising with the importance of online channels for retailers in general. For retailers that have accelerated their shift online during the pandemic, some of them have emerged as big winners. And you can see that some of the major retail stocks have been bullish in recent months. The question is, is there more room to go for these top retail stocks?
Costco Wholesale (COST Stock Report) has been one of the top retail stocks to watch throughout the pandemic. The whole giant reported a 27% jump in quarterly profit on Thursday, bringing in $4 billion in profit for the first time in a fiscal year. This was boosted by strong demand for foods, electronics, gardening, and sporting products during the pandemic.
“As people are spending less on travel, air, and hotel and dining out, they seem to have redirected at least some of those dollars to categories like lawn and garden, furniture, mattresses, exercise equipment, bicycles, housewares, cookware, domestics and the like,” Chief Financial Officer Richard Galanti
Despite having recorded another smashing quarter, COST stock dipped during post-market trading after releasing the report. While a healthy level of profit-taking is normal, it seems to me that the company’s unwillingness to offer curbside grocery pickup could be the reason why it’s stock is plummeting. The company has faced some criticism for lagging on curbside pick-up while rivals such as Walmart and Target (TGT Stock Report) are at full throttle.Top Retail Stocks To Buy [Or Sell] Before October 2020: Kroger
Kroger (KR Stock Report) has started receiving renewed attention from consumers. According to the U.S. Census Bureau, grocery store sales have surged 13% higher through the end of July. This bodes well with Kroger’s fiscal-second-quarter report which saw a 127% jump in e-commerce revenue. The company expects the shift to online channels will be a “lasting and structural” change in its business model.
“Even before the pandemic, our digital business had become a tailwind”. “That pandemic certainly has accelerated customer preference for seamless offerings. Our customers are increasingly turning to our eCommerce solutions for their groceries and household essential needs. Many of our customers are ordering groceries online for the first time, as a result of COVID-19. And the majority of them tell us they plan to continue to do so in the future.” -Kroger CEO Rodney McMullen
With years of digital transformation finally paying off as shoppers opt for online sales tools and pickup-and-delivery options, KR stock has been off to the races this year by climbing around 17% year to date as of this writing. The stock could move higher if there are signs of some continuation of its momentum from the first quarter. Besides, should consumers’ preference for online shopping stocks around after the pandemic, Kroger would be in a strong position to benefit.Top Retail Stocks To Buy [Or Sell] Before October 2020: Walmart
When it comes to top retail stocks to buy, Walmart (WMT Stock Report) usually tops the list. The largest retailer company in the world posted its biggest earnings in 31 years last month. That may not have been surprising as consumers were spending their stimulus checks. The company leverages its physical stores and its e-commerce initiatives to deliver goods to customers during the pandemic.
The retail giant has been grabbing headlines for all the right reasons recently. Whether it’s signing partnerships with online players, new subscription services to take on Amazon, or the chance to have a stake in TikTok, these factors have been instrumental in pushing WMT stock higher. While investors might have their reservations about buying WMT stock after a strong rally, many analysts believe that there may be more gains in store.
On Tuesday, Oppenheimer analyst Rupesh Parikh raised his price target to $152 from $145 after accounting for his higher earnings estimates. That’s an 11% upside from its current price. The target revision came after he saw “the case for outperformance driven by the potential to deliver at least low-single-digit operating income growth and upside potential related to new investments.”