The retail sector has been growing at a steady pace amid inflationary pressures. Retail sales rose once again in September, surpassing expectations. Although higher gasoline prices were partly responsible for the jump in sales, the sector has shown immense resilience amid concerns over a slowing economy.
Consumers have been spending aggressively despite high prices, which has been giving sales a major boost. Given this situation, it would be ideal to invest in retail stocks with a strong online presence. We have selected four stocks, namely, Abercrombie & Fitch ANF, Casey's General Stores, Inc. CASY, Five Below, Inc. FIVE and Kohl's Corporation KSS.
Retail Sales Rise in September
Retail sales jumped 0.8% in September, surpassing analysts’ expectations of a rise of 0.3%. The jump in September follows a revised 1.3% surge in retail sales in August, the Commerce Department reported on Thursday.
The retail sector has performed exceptionally well this year, with sales falling only in July for the first time in five months. Although gasoline prices played a major role in September’s rise, the overall retail sector did well on higher demand and steady consumer spending.
Gasoline prices rose 7.1% in September. Year over year, retail sales rose 6.3% in September. Total sales for July through September climbed 5.5% from the year-ago levels.
Oil prices have surged over the past six months owing to the Middle East crisis, making goods costlier. However, higher demand for goods has seen consumers spending at an aggressive pace.
Market experts believe consumer spending grew ???nearly 3.4% in the third quarter from year-ago levels after climbing 3.8% in the second quarter, according to a Reuters report.
4 Retail Stocks With Growth Potential
Abercrombie & Fitch
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. ANF's product portfolio includes knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids, under the Abercrombie & Fitch, Abercrombie kids and Hollister brands.
Abercrombie & Fitch’s expected earnings growth rate for the current year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the past 60 days.
Casey's General Stores
Casey's General Stores, Inc. operates convenience stores under the Casey's and Casey's General Store names in 16 states, mainly Iowa, Missouri and Illinois. CASY offers a comprehensive range of products and services to meet the needs of its customers. In addition to fuel, the stores provide a wide variety of merchandise, including groceries, prepared food, snacks, beverages, tobacco products, health and beauty aids, school supplies, housewares, pet supplies and automotive supplies.
Casey’s has an expected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 60 days.
Five Below, Inc
Five Below, Inc. is a specialty value chain retailer that provides a wide range of premium quality and trendy merchandise for $5 or below. FIVE mainly targets teenagers or pre-teen shoppers for its products, which include certain brands and licensed merchandise. Notably, these products belong to categories such as Style, Room, Sports, Tech, Create, Party, Candy and Now.
Five Below’s expected earnings growth rate for the current year is 57.6%. The Zacks Consensus Estimate for current-year earnings has improved 15.2% over the past 60 days.
Kohl's Corporation
Kohl's Corporation offers moderately priced apparel, footwear and accessories for women, men and children, along with beauty and home products. KSS targets value-oriented, moderate-income households and combines national brands with proprietary and exclusive brands.
Kohl's Corporation’s expected earnings growth rate for the current year is 29.6%. The Zacks Consensus Estimate for Dollar Tree’s current-year earnings has improved 54.4% over the past 60 days.
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Kohl's Corporation (KSS): Free Stock Analysis Report
Abercrombie & Fitch Company (ANF): Free Stock Analysis Report
Casey's General Stores, Inc. (CASY): Free Stock Analysis Report
Five Below, Inc. (FIVE): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).