Holiday season is around the corner, but the U.S. economy does
not seem to be fully in the festive mood. The government shutdown
and the ongoing political tussle, uncertain economic recovery,
and soft job opportunities are having a rippling impact on
investors' sentiment, which continues to be jittery.
What Is Impacting the Holiday Season?
With the government shutdown entering its second week and the
fast approaching Oct 17 debt ceiling deadline, markets have
reasons enough to gradually turn apprehensive. The Dow Jones
Industrial Average lost 136.34 points (or 0.90%) yesterday before
closing at 14,936.24.
The Standard & Poor's 500 Index shed 14.38 points (or
0.85%) to finish the trading session at 1,676.12. The Nasdaq
Composite Index fell 37.38 points (or 0.98%) to end the day at
It is obvious that markets remain susceptible to the economic
impasse and we may witness further decline until the cloud of
obscurity is not removed. The overall scenario doesn't seem much
convincing as of now and the Federal Reserve is continuing with
its $85 billion monthly stimulus program to keep interest rates
low and boost economic growth.
The economic data is also not favorable. Unemployment rate is
currently hovering at around 7.3%, which is still well above the
Fed's target. Further, Conference Board data suggests that
Consumer Confidence Index dropped to 79.7 in September, down from
81.8 in August.
Need to be Hawk-Eyed This Season
Retailers need to be 'hawk-eyed' this holiday season to make
the most of it. They need to grab every opportunity as and when
they come, and try all means to drive in cautious,
budget-constrained consumers to the shop as the season may be a
Data compiled by ShopperTrak suggest that retail sales are
projected to increase 2.4% this holiday season. However, the
expected growth rate has tempered down from 3% registered in
2012, 4% in 2011 and 3.8% in 2010, hinting at a stiff competition
ahead. This leading provider of shopper analytics also revealed
that store traffic would decline 1.4% during this holiday season
as against an increase of 2.5% witnessed in 2012.
What is further making this holiday season challenging for
retailers is the time frame - as 2013 presents only 25 days
between Black Friday and Christmas as against 31 days last year.
Moreover, retailers, who witness more traffic during weekends,
will have only 4 full weekends this time around versus 5 in
We believe retailers will leave no stone unturned to tap this
holiday season. Be it early-hour store openings, promotional
events, free shipping on online purchases or heavy discounts,
retailers will try all tricks to boost sales.
Retail Still a Lucrative Investment Opportunity
Banking on its wide spectrum, the retail sector still remains
a lucrative investment opportunity for investors. A reflection of
that was evident from the
SPDR S&P Retail
Market Vectors Retail ETF
) surging roughly 30% and 24.4% year-to-date, respectively, which
were ahead of the S&P 500 that rose 14.6% so far this
Thus, identifying the future winners from the sector would be
a prudent idea to make an investment decision.
Three Stocks That May Enrich Your Portfolio
Here we focus on three stocks with above average earnings
growth that you can capitalize on and enrich your portfolio.
We suggest investing in
Deckers Outdoor Corporation
). Product innovation, effective cost management, store
augmentation and a strong focus on profitable markets have
facilitated the company to keep afloat in this sluggish economic
environment. Shares of this Goleta, CA-based company and a Zacks
Rank #1 (Strong Buy) stock currently trades at a forward P/E
(price-to-earnings) of 16.63x, a discount of 15.5% to the peer
group average of 19.69x, suggesting upside potential. Moreover,
an impressive long-term expected earnings growth of 15% makes the
), a designer and marketer of branded children's wear, is another
stock to bet your bucks. This Zacks Rank #1 (Strong Buy) stock
has amassed a year-to-date return of 35.5%. The company's
long-term estimated EPS growth rate is 17.2%, higher than the
peer group average of 15%. Moreover, this Atlanta, GA-based
company is expected to witness earnings growth of 18.8% in 2013
and 19.7% in 2014.
Another stock that investors may wish to consider is
L Brands, Inc.
). The company commands a market leading position in the
lingerie, personal care and beauty segments. This Zacks Rank #2
(Buy) stock has amassed a year-to-date return of roughly 30%.
Though the stock looks a bit pricey with a P/E multiple of
18.90x, it should not disappoint investors given the company's
long-term expected earnings growth of 12.3%.
We believe that the above stocks with strong fundamentals and
growth prospects are capable of quenching investors' search for
the right stocks.
CARTERS INC (CRI): Free Stock Analysis Report
DECKERS OUTDOOR (DECK): Free Stock Analysis
L BRANDS INC (LTD): Free Stock Analysis
MKT VEC-RETAIL (RTH): ETF Research Reports
SPDR-SP RET ETF (XRT): ETF Research Reports
To read this article on Zacks.com click here.