3 retail stocks to add to your holiday shopping list
With Thanksgiving just over a week away, that means the holiday season is upon us. It also means that Black Friday is just around the corner, that is, when retailers are promoting big sales and hence it is the busiest shopping day of the year. If a retail business hasn’t had a strong year, Black Friday and the holiday season is where it can increase sales. If a business has performed well before, it usually gets an even bigger raise at this time of year.
In fact, the retail sector has been one of the biggest beneficiaries of the pandemic recovery. The SPDR S&P Retail ETF (XRT) has shown bullish momentum since late March and is up 12% since October 27, compared to a 2.8% gain for the S&P 500. As more people get vaccinated and shop in retail stores, retail businesses recorded higher growth and price performance. .
The question is which retail stocks are most likely to continue this performance. This is where our POWR odds system kicks in. Stocks that have a strong buy or buy overall rating are likely to outperform stocks with lower ratings. That is why investors should consider purchasing stocks rated Ross Stores, Inc. (ROST), Kohl’s Corporation (KSS) and Dillard’s, Inc. (DDS) for this holiday season.
Ross Stores, Inc. (ROST)
ROST is one of America’s leading low-cost clothing and homewear retailers, operating more than 1,850 stores under the Ross Dress for Less and dd’s Discounts banners. The company offers a variety of branded products and aims to cut prices from conventional retailers by 20-70%. It uses an opportunistic and flexible merchandising approach.
With a relatively straightforward shopping environment centered around a scavenger hunt experience, the company maximizes inventory turns and traffic, enabling its low-cost approach. Although its third quarter results will not be released until November 18, management has raised its guidance for 2021 based on strong second quarter results. These were driven by strong customer demand across all merchandise categories and all regions
The company has an overall rating of B, which translates into a purchase rating in our POWR rating system. The company has a growth rating of A, with analysts expecting earnings to rise 478.2% for the year. ROST also has an A quality rating due to a rock solid balance sheet. For example, the company had $ 5.6 billion in cash in the last quarter, compared to just $ 65 million in short-term debt.
We also provide value, momentum, stability and sentiment ratings for ROST, which you can find here. ROST is ranked # 13 in the Fashion and Luxury Industry, ranked A. For more top stocks in this industry, Click here.
Click here to view our 2021 Retail Industry Report
Kohl Company (KSS)
KSS operates 1,162 department stores in 49 states that sell private and nationally branded clothing, footwear, accessories, cosmetics, and home furnishings at moderate prices. Most of these stores are located in strip centers. The company also operates a large digital sales business. Women’s clothing is the store’s largest category, generating around 25% of sales.
The company benefited from a strategic initiative launched by KSS last year. Management wanted to increase its sales and increase its operating margin. The plan focuses on four areas: driving sales growth, increasing operating margin, implementing disciplined capital management, and embracing a responsible and inclusive culture. KSS has also benefited from its strong brand portfolio and partnerships.
The company has an overall rating of B and a purchasing rating in our POWR rating system. KSS has a growth rating of A as profits are expected to increase 6,300% year over year in the third quarter. The company also has a value rating, which isn’t surprising with a trailing P / E of 12.38 and a forward P / E of 11.52. Its price / sales ratio of 0.5 is also low.
For the rest of the KSS ratings (Momentum, Stability, Sentiment and Quality), Click here. KSS is ranked # 17 in the Fashion and Luxury Industry, ranked A.
Dillard’s, Inc. (DDS)
DDS is an American retailer of fashion clothing, cosmetics and home furnishings. Its stores offer a wide variety of merchandise and feature national and exclusive brand products. The company also operates a general construction business, CDI Contractors, which includes the construction and renovation of stores.
The company recently released its results for the second quarter of fiscal 2021, where sales and earnings have exceeded expectations and increased year over year. Results were driven by strong momentum in consumer demand. Management also focused on inventory management and expense control, which helped drive earnings growth.
DDS has an overall score of B, resulting in a buy score in our POWR rating system. The company has an A growth rating as analysts forecast an 1,187.8% increase in profits for the year. DDS also has a quality rating of A due to strong fundamentals. Not only does the company have a return on equity of 27.5, but its debt margin is only 0.4.
To access all DD ratings, such as Value, Momentum, Stability, and Sentiment, click here. DDS is ranked # 10 in the fashion and luxury industry, ranked A.
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This article was written by David Cohne, chief value strategist for StockNews.com. David has been helping investors find the most profitable stocks for over 20 years.
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ROST shares were trading at $ 115.41 per share on Monday afternoon, down $ 0.09 (-0.08%). Since the start of the year, the ROST has fallen by -5.35%, compared to a 26.20% increase in the benchmark S&P 500 during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the chief value strategist for StockNews.com and the publisher of the POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services firms, hedge funds and online publications. David enjoys researching and writing about stocks and markets. It takes a fundamental quantitative approach in evaluating stocks for readers. Following…