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4 Retail Stocks that Crushed the Market in 2016

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As 2016 draws to a close, a throwback reflects that the year was marked by a lot of significant events like Donald Trump's victory, Britain's vote for Brexit, energy market volatility, slowdown in China, the uncertainty surrounding the rate hike and other global issues. Consequently, these events had their impact ripple across the stock market creating volatile atmosphere.

Of late things have been favorable on the domestic front. Steady gain in oil prices , improving labor market, inflation edging toward the desired 2% target and rate hike this month indicate that the economy is on a recovery mode. The latest GDP data displayed that the economy grew at a faster pace than expected previously, which is an indication that steady economic recovery is set to continue. (Read more: 5 Stocks to Buy as Q3 GDP Rises .)

Moreover, the imminent Presidency of Trump has boosted investors' sentiment as the newly elected administration's policies are widely expected to propel growth and inflation. Further, possible tax cuts, deregulations and large fiscal stimulus buoyed optimism in the markets.

Changing Retail Landscape

The retail landscape has been undergoing a fundamental change in recent years, with technology leaving a deep and lasting impact on the space. Online shopping dominates the space now with its effective grip steadily taking over the minds of consumers. This shift in buying behavior has forced retailers to come up with new ways to market their products.

At this crucial juncture, change has become the need of the hour, and retailers and manufacturers who have responded quickly to it by staying technologically ahead stand in good stead.

Parallel to this shifting retail landscape, the industry is facing major challenges from a still-strong U.S. dollar, volatile commodity costs and an uncertain global macroeconomic environment. A strong dollar has resulted in suppressed spending from foreign tourists. Moreover, this is also impacting retailers with overseas operations. Consequently, retailers are forced to slash prices and elevate promotions to attract traffic.

Nevertheless, retailers are efficiently allocating a large chunk of their capital toward a multi-channel growth strategy focused on improving merchandise offerings, developing IT infrastructure to enhance the web and mobile experience of customers, renovating stores, developing fulfillment centers to enable speedy delivery, implementing an enterprise-wide inventory management system as well as enhancing their relationship with existing and new customers.

These initiatives have led some of the retailers to emerge successfully despite prevailing headwinds and also outperformed the major indices. So far in 2016, the S&P 500, the Dow Jones and the Nasdaq has gained 14.5%, 11% and 16.1%, respectively. Here we have highlighted four Retail/Wholesale stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of "A" or "B." Moreover, these stocks have also surged over 30% year to date, crushing the market.

Prominent Picks

Shares of Best Buy Co., Inc.BBY , a retailer of technology products, services and solutions have gained 47.1% year to date. Moreover, the stock has outperformed the Zacks categorized Retail-Consumer Electronic industry, which witnessed a gain of 29.2%. The company posted an average positive earnings surprise of 25.7% in the trailing four quarters and has a long-term earnings growth rate of 11.9%. The stock has a VGM Score of "A" and flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Cracker Barrel Old Country Store, Inc.CBRL has surged 34.1% so far in 2016, outperforming the Zacks categorized Retail-Food & Restaurants industry, which gained 1.4%. The company's earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 3%. The Zacks Rank #2 company has a VGM Score of "B" and long-term earnings growth rate of 9.2%.

, a retailer of branded apparel products, is a solid bet, with a Zacks Rank #1 and a VGM Score of "B." The company posted an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%. The stock has more than doubled so far this year and comfortably outperformed the Zacks categorized industry, which increased only 6.2%.

Burlington Stores, Inc.BURL , a retailer of branded apparel products, is a solid bet, with a Zacks Rank #1 and a VGM Score of "B." The company posted an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%. The stock has more than doubled so far this year and comfortably outperformed the Zacks categorized Retail-Discount & Variety industry, which increased only 6.2%.

America's Car-Mart, Inc.CRMT , which operates an automotive retailer in the U.S has gained 71.6% year to date and outperformed the Zacks categorized Retail/Wholesale Auto/Truck industry which increased 3.1%. The Zacks Rank #1 company's earnings have surpassed the Zacks Consensus Estimate in the trailing two quarters. Moreover, the company has an impressive long-term earnings growth rate of 45.5% and VGM Score of "B."

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?

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AMERICAS CAR-MT (CRMT): Free Stock Analysis Report

BEST BUY (BBY): Free Stock Analysis Report

CRACKER BARREL (CBRL): Free Stock Analysis Report

BURLINGTON STRS (BURL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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