Grab these 4 stocks valued as a solid buy after retail sales posted a surprise gain in August
While economists expected the resurgence of COVID-19 cases and supply chain bottlenecks to affect consumer activity and retail sales last month, a rebound in the activity due to back-to-school purchases and strong sales in most regions resulted in a positive surprise.
Globally retail sales in August rose 0.7% Seasonally adjusted from July against the Dow Jones estimate of a 0.8% drop.
Given that retail sales are also expected to be strong over the next few months, we think it might be wise to bet on some fundamentally healthy Target Corporation (TGT), Caleres, Inc. (CAL), Tilly’s, Inc. (TLYS) and Tile Shop Holdings, Inc. (TTSH). Each of these stocks is rated A (strong buy) in our POWR odds system.
Click here to view our 2021 Retail Industry Report
Target company (TGT)
TGT is a general merchandise retailer offering assorted food, clothing, accessories, home decor, electronics, seasonal deals, and beauty and household essentials through its stores and digital channels. As of January 30, 2021, the Company operated approximately 1,897 stores. TGT is headquartered in Minneapolis, Minnesota.
On August 23, TGT announced the return of Bullseye’s Top Toys for the holiday season, which are available in over 160 from The Walt Disney Company (SAY) at Target stores across the country. TGT hopes to provide a unique in-store experience and a stronger online presence by offering a curated assortment of toys with more exclusives.
TGT announced The Fall Designer Collection on August 6, featuring over 180 modern and classic fall wardrobe essentials from four design partners. With a price ranging from $ 15 to $ 80, TGT expects to generate good sales during the current fall season.
TGT’s total revenue for its fiscal second quarter, ended July 31, 2021, increased 9.5% year-on-year to $ 25.16 billion. The company’s operating profit was $ 2.47 billion, up 7.3% from the same period a year earlier. Its net income was $ 1.82 billion for the quarter, an increase of 7.5% from the same period a year earlier. Its adjusted EPS stood at $ 3.64, indicating a 7.9% year-over-year improvement. The company had $ 7.37 billion in Cash and cash equivalents until July 31, 2021.
TGT has exceeded consensus EPS estimates in each of the past four quarters. A consensus estimate of revenue of $ 24.52 billion for the current quarter, ending October 31, 2021, represents an 8.3% gain from the previous year period. Analysts expect the stock’s EPS to grow at a rate of 13.3% per year over the next five years.
The stock has gained 67.1% in price over the past year and 6.7% in the past three months. It closed Friday’s trading session at $ 246.67.
TGT’s POWR ratings reflect this promising outlook. The stock has an overall A rating, which equates to a strong buy in our proprietary rating system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.
The stock has a B rating for value, sentiment and quality. Click on here to see the additional notes for TGT (Growth, Stability and Momentum).
TGT is ranked n ° 2 out of 41 actions in classification A Grocery Stores / Big Box Retailers industry.
Recently, the Reitmeister Total Return Portfolio (RTR) closed a winning transaction on TGT for a gain of 65%. Learn more about the RTR service here.
Caleres, Inc. (CAL)
CAL, which is based in St. Louis, Mississippi, designs, sources and markets licensed, branded and private label athletic, leisure and dress footwear for women, men and children internationally. The company sells its products through its branded retail stores and e-commerce businesses.
On September 13, 20CAL’s Sam Edelman launched his new collection of Sam Edelman Kids shoes designed exclusively in-house for the fall 2021 season. Prices range from $ 60 to $ 100. The Sam Edelman Kids FW21 collection uses premium leathers and premium materials in a combination of innovative colourways and treatments and expects good sales this fall.
Refined with whimsical florals interspersed with refreshing greens, sandalwood and heartwood, CAL’s Sam Edelman brand launched their very first eau de parfum on August 25, 2021. Made by perfumer Raymond Matts and lead perfumer of CAL Firmenich Frank Voelkl, Sam Edelman expects this fragrance to generate growing demand in the luxury market with the help of ScentBeauty, the world’s leading multi-brand e-commerce platform for fragrances and fragrances.
For its fiscal second quarter, ended July 31, 2021, CAL’s net sales increased 34.7% year-over-year to $ 675.53 million. The company’s gross profit was $ 322.29 million, representing a 76.5% year-over-year improvement. Its operating profit was $ 62.79 million, compared to a loss of $ 24.14 million in the prior year period. CAL’s adjusted net income was $ 45.97 million, compared to a loss of $ 21.12 million in the prior year period. Its adjusted EPS stood at $ 1.19, down from a loss of $ 0.57 per share during the period last year. As of July 31, 2021, the company had $ 54.68 million in cash and cash equivalents.
CAL’s EPS is expected to increase 138.5% year-over-year to $ 1.15 in the current quarter, ending October 31, 2021. It has beaten Street’s EPS estimates in each of the following four quarters. Analysts expect its revenue to rise to $ 753.48 million for the current quarter, an increase of 16.4% year-over-year. Its EPS is expected to grow at a rate of 15% per year over the next five years.
The stock has gained 103.9% of its price in the past year and 18.8% in the past six months. It ended Friday’s trading session at $ 22.25.
CAL’s POWR ratings reflect this promising outlook. The stock has an overall A rating, which equates to a strong buy in our proprietary rating system.
The stock has an A rating for growth and momentum and a B rating for value, sentiment and quality. Click here to see additional notes for CAL stability.
Out of the 63 shares rated A Fashion & Luxury industry, CAL is ranked # 4.
Tilly’s, Inc. (TLYS)
TLYS is a specialty retailer of casual clothing, footwear, accessories and durable goods for young men and women, and children. The company also offers an assortment of third party merchandise in its various product categories and sells its wares through its e-commerce website. TLYS is headquartered in Irvine, California.
TLYS ‘total net sales for its fiscal second quarter, ended July 31, 2021, increased 48.7% year-on-year to $ 201.95 million. The company’s gross profit was $ 74.73 million, representing a 79.3% year-over-year improvement. Its operating profit was $ 26.43 million, up 242.8% from the same period a year earlier. While its net income increased 287.4% year-on-year to $ 20.40 million, its EPS increased 266.7% to $ 0.66. As of July 31, 2021, the company had $ 81.89 million in cash and cash equivalents.
For the current quarter, ending October 31, 2021, analysts expect TLYS ‘EPS to be $ 0.33, up 371.4% from the prior year period. It has beaten Street’s EPS estimates in three of the past four quarters. The consensus estimate of revenue of $ 190.78 million for the current quarter represents a 36% increase over the prior year period. Analysts expect TLYS’s EPS to grow at a rate of 12% per year over the next five years.
TLYS has won 91.4% of awards in the last year and 16.8% in the last month. It ended Friday’s trading session at $ 14.53.
TLYS ‘strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equates to a strong buy in our proprietary rating system.
The stock has an A rating for momentum and sentiment, and a B rating for growth, value and quality. We also rated TLYS for stability. Click here to access all TLYS reviews.
TLYS is ranked # 7 in the fashion and luxury industry.
Tile Shop Holdings, Inc. (TTSH)
TTSH is a specialty retailer of manufactured and natural stone tiles, installation and maintenance materials and related accessories. The company offers marble, travertine, granite, quartz, sandstone, porcelain, glass, cement, wood-look and metal tiles. TTSH sells its products through its website and offers delivery services through third party freight providers. TTSH is headquartered in Plymouth, Minn.
For its fiscal second quarter, ended June 30, 2021, TTSH’s net sales increased 42% year-on-year to $ 96.19 million. The company’s gross profit was $ 66.43 million, up 42.3% from the previous year period. Its operating income was $ 7.61 million for the quarter, compared to a loss of $ 1.79 million for the period last year. TTSH’s net income was $ 5.49 million for the quarter, compared to a loss of $ 760,000 in the prior year period. Its EPS was $ 0.11, down from a loss of $ 0.02 per share in the prior year period. The company had $ 44.75 million in cash and cash equivalents as of June 30, 2021.
TTSH has won 188% of awards in the last year and 9.2% in the last month. It closed Friday’s trading session at $ 7.92.
It’s no surprise that TTSH has an overall A rating, which equates to a strong buy in our POWR rating system.
The stock has an A rating for quality and a B rating for growth, momentum and sentiment. Click here to see additional ratings for TTSH value and stability.
Of the B-rated, 40 shares Specialized retailers industry, TTSH is ranked No. 1.
Note that TTSH is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $ 10 portfolio. Learn more here.
Click here to view our 2021 Retail Industry Report
Shares of TGT were trading at $ 239.92 per share on Monday afternoon, down $ 6.75 (-2.74%). Since the start of the year, TGT has gained 37.31%, compared to a 15.60% increase in the benchmark S&P 500 during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a particular interest in finding market inefficiencies. She is passionate about educating investors so that they can be successful on the stock market. Following…