An improving labor market and rising stock and housing markets
have consumers feeling a bit more confident about opening their
wallets again - despite rising gas prices. However, that doesn't
mean that all retailers are going to see top-line growth this year.
There are always winners and losers in retail, no matter what the
economy is doing.
So how do you know which ones to buy and which ones to avoid?
One important item to look at is
. This metric compares sales across stores open at least a year.
This is also known as
This is beneficial because it allows investors and analysts to
compare sales between different retailers and can alert them to
shifts in consumer demand. Total sales growth, while important,
will naturally be higher among retailers who are rapidly opening
new stores or making acquisitions. Same-store sales ignores this,
however, and only focuses on sales at existing stores.
It's also beneficial in that it excludes the "honeymoon phase" of
strong sales typically experienced shortly after stores are opened
in new locations.
Same-Stores Sales Rise in May
According to a composite of 12 retailers by the International
Council of Shopping Centers, overall sales at stores open at least
a year increased +3.2% in May. Unfortunately many retailers have
recently stopped reporting monthly sales figures, so this report is
becoming less and less important. However, retailers still provide
same-store sales figures in their quarterly reports, so make sure
to keep a close eye on those numbers.
So which retailers are currently seeing strong increases in
same-store sales growth?
Here are 4 retailers on the rise:
Lumber Liquidators is the largest specialty retailer of hardwood
flooring in North America with over 290 locations. It is a Zacks
Rank #1 (Strong Buy) stock.
Conn's is a specialty retailer with 70 retail locations in Texas,
Louisiana, Oklahoma, New Mexico and Arizona. Its primary products
include appliances, furniture and mattresses, consumer electronics
and home office equipment. It is currently a Zacks Rank #3 (Hold).
Big 5 Sporting Goods Corporation
Big 5 is a sporting goods retailer with 414 stores in 12 western
states. It is a Zacks Rank #1 (Strong Buy) stock.
Cabela's is a specialty retailer focused on hunting, fishing,
camping and related outdoor merchandise. It is a Zacks Rank #2
The Bottom Line
When evaluating retail stocks, it's important to look at a
company's recent same-store sales trends. These 4 are seeing strong
demand for their products at existing locations, which should lead
to rising earnings estimates and rising stock prices.
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
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