With jobless claims at a 48-year low and wage hikes and the tax breaks putting more cash in consumers' pockets, retail has sprung back to life. Now that rosier economic conditions are at the forefront, which retail stocks should you own?
"I would still stick with the off-pricers," retail expert Michael J. Berne told TheStreet. "Cosmetics and beauty have also been strong for a while now, as has home and home improvement. Some teen fashion retailers are showing signs of recovery."
3 Retail Stocks to Buy
TJX Companies Inc.
The Framingham, Mass.-based discounter, which owns TJMaxx and Marshall's, reported total sales of $10.96 billion in its last quarter, exceeding Wall Street projections of $10.76 billion. For the year, comparable store sales increased 2%, marking an unworldly 22 straight years of growth.
"TJX's [earnings] update provides sufficient proof that the off-price market has not yet run out of steam," wrote Neil Saunders, Managing Director of GlobalData Retail, in a post-fourth-quarter earnings note.
With TJX Companies (TJX) stock under-performing the S&P 500 by about four times over the past year, now may be a good time to get in at a reasonable price. After all, the company is a solid grower globally and continues to have a wide lead over others in the off-price retail industry.
Kohl's (KSS) fourth-quarter earnings clocked in at $1.99, smashing Wall Street estimates by 22 cents. Net sales of $6.78 billion surpassed estimates of $6.74 billion.
Investors should give Kohl's a look not just because of its latest holiday season, but it's new willingness to shake things up a bit.
Kohl's is pushing the envelope by accepting Amazon.com Inc. (AMZN) returns and debuting Aldi grocery stores within a handful of its locations. Both initiatives could make Kohl's more of a shopping destination than mall-based rivals Macy's (M) and J.C. Penney (JCP) . Amazon is a holding in Jim Cramer's Action Alerts Plus.
Cowen & Co's research team recently upgraded the stock to outperform and raised its price target to $74 from $66. On Friday, the stock closed at $62.97.