The holiday season is round the corner but the U.S. economy does
not seem to be in the festive mood. The political tussle and the
subsequent 16-day U.S. government shutdown, uneven economic
recovery, and soft job opportunities are having a rippling impact
on investors' sentiment, which continues to be jittery.
The government shutdown and the debt-ceiling crisis took a toll on
consumer confidence that dropped to 71.2 in October from 80.2 in
September. This could be detrimental for the economy's health, as
consumer spending constitutes over two-third of the U.S. economic
The overall scenario doesn't seem too convincing as of now with the
Federal Reserve continuing with its $85 billion monthly stimulus
program to keep interest rates low and boost economic growth. The
two-day Federal Open Market Committee (FOMC) meeting got underway
on Tuesday and market experts are keeping their fingers crossed
that the Fed would make no changes with respect to quantitative
easing, until Apr 2014.
Investors and market experts are cautiously optimistic that nothing
dramatic will happen in the meeting. In fact, expectations of a
favorable outcome also helped the benchmarks climb up the ladder.
The Dow Jones Industrial Average moved up 111.42 points (or 0.72%)
yesterday before closing at 15,680.35. The Standard & Poor's
500 Index gained 9.84 points (or 0.56%) to finish the trading
session at 1,771.95. The Nasdaq Composite Index jumped 12.21 points
(or 0.31%) to end the day at 3,952.34.
Interestingly, the current situation as of now seems to be a mixed
one. Onlookers await a positive outcome while the consumer
confidence slumped to its 6-month low. In such a scenario, banking
on its wide spectrum, the Food/Drug-Retail/Wholesale sector still
remains a lucrative investment opportunity for investors. Thus,
identifying the future winners from the sector would be a prudent
idea to make an investment decision.
The Future Winners among the Crowd
Picking the best stocks from the Food/Drug-Retail/Wholesale space
for one's portfolio is a fairly simple task. One way to narrow down
the list of choices during this earnings season is by looking at
stocks that have the combination of a favorable Zacks Rank - Zacks
Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) - and a positive Zacks
Earnings ESP is our proprietary methodology for identifying stocks
that have the best chance to surprise with their next earnings
For investors seeking to apply this strategy to their portfolio, we
have highlighted 3 Food/Drug-Retail/Wholesale stocks that may stand
out this earnings season:
Red Robin Gourmet Burgers, Inc.
) is a Zacks Rank #2 stock with an earnings ESP of +3.70%. The
current Zacks Consensus Estimate for third-quarter 2013 is pegged
at 27 cents a share, reflecting an increase of 13% year over year.
This Greenwood Village, Colo-based casual dining restaurant chain
had registered an average positive earnings surprise of 25.6% over
the trailing four quarters, and has a long-term earnings
expectation of 13.4%. The company is slated to report results on
Nov 5, 2013.
The Wendy's Company
) is a Zacks Rank #3 stock having an earnings ESP of +16.67%. The
current Zacks Consensus Estimate for third-quarter 2013 is 6 cents
a share, portraying a 106.1% growth from the prior-year period.
This Dublin, Ohio based quick-service restaurant operator had
registered an average positive earnings surprise of 35.8% over the
trailing four quarters, and has a long-term earnings expectation of
21.8%. The company is scheduled to report on Nov 7, 2013.
Harris Teeter Supermarkets, Inc.
) is a Zacks Rank #3 stock and has an earnings ESP of +6.78%. The
current Zacks Consensus Estimate for fourth-quarter fiscal 2013 is
59 cents a share, showcasing a 4.1% rise from the year-ago period.
This Charlotte, N.C. -based supermarket chain will report on Oct
We believe that the above stocks with strong fundamentals and
growth prospects are capable of quenching investors' search for the
right stocks. As the U.S. stocks look for a survival strategy, a
sneak peek to the space for some possible outperformers backed by a
favorable Zacks Rank and a positive Zacks Earnings ESP could be
handy for investors.
HARRIS TEETER (HTSI): Free Stock Analysis
RED ROBIN GOURM (RRGB): Free Stock Analysis
WENDYS CO/THE (WEN): Free Stock Analysis Report
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