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8 Retail Stocks Set to Soar in 2019

8 Retail Stocks Set to SoarPosted on Monday, September 17th, 2018 by Chris Markoch

Strong second-quarter results have made retail stocks look more attractive to investors. Of course, Amazon continues to draw attention, but investors are looking at stocks that extend beyond the online giant that continues to change the retail business model. This is great news for the industry as a whole as the sector prepares to ramp up for what they hope will be a profitable holiday season.

Will that excitement spill over into 2019? For several retailers, it appears that may be the case. We’ve identified eight stocks that are showing strong results now and are projected to see their stock price climb into the coming year.

#1 - Amazon (NASDAQ:AMZN)

Amazon.com logo

Amazon (NASDAQ: AMZN) - Does Amazon still have room to grow? For many investors and analysts, the answer is yes. There are a few reasons for that. First, e-commerce is a sector that is still in its developing stages. According to Statista, e-commerce is well-positioned to capture more than their fair share of growth in a sector that only accounted for approximately 10% of worldwide retail sales (9.7% in the United States). One of the reasons for that is their fulfillment centers which allow them to deliver on their promise of two-day shipping for their Prime customers – a benefit that may also be accounting for Prime customers outspending Amazon’s non-subscribers.

Another area where Amazon is set to grow is cloud computing. With $6.1 billion in sales, they are the market share leader in the category by a large margin. At 34%, their market share is over twice the share of the second-place company, Microsoft. But while competitors are trying to keep up with Amazon in the digital space, Amazon continues to make in-roads in the brick-and-mortar market. Their acquisition of Whole Foods and their partnership with Berkshire-Hathaway and JPMorgan Chase to help them become a player in the healthcare sector. Add to that, their continued investment and growth in their Echo voice-activated speakers and you can see why investors remain bullish on the company's stock going into 2019 despite its current valuation which may scare off some investors.

About Amazon.com
Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS) segments. It sells merchandise and content purchased for resale from third-party sellers through physical stores and online stores. The company also manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, and Echo devices; provides Kindle Direct Publishing, an online service that allows independent authors and publishers to make their books available in the Kindle Store; and develops and produces media content. In addition, it offers programs that enable sellers to sell their products on its Websites, as well as their own branded Websites; and programs that allow authors, musicians, filmmakers, skill and app developers, and others to publish and sell content. Further, the company provides compute, storage, database, and other AWS services, as well as compute, storage, database offerings, fulfillment, publishing, digital content subscriptions, advertising, and co-branded credit card agreement services. Additionally, it offers Amazon Prime, a membership program, which provides free shipping of various items; access to streaming of movies and TV episodes; and other services. It serves consumers, sellers, developers, enterprises, and content creators. Amazon.com, Inc. has a strategic partnership with Volkswagen AG. The company was founded in 1994 and is headquartered in Seattle, Washington.

Current Price: $1,751.60
Consensus Rating: Buy
Ratings Breakdown: 41 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $2,192.08 (25.1% Upside)

#2 - Macy's (NYSE:M)


Macy’s (NYSE: M) - If you’re looking for a retail stock with a solid valuation, then you might be attracted to Macy’s. The brick-and-mortar retailer’s shares are up over 50% for the year, helping it rise to be a top 10 performer (year-to-date) in the S&P 500. The question that you might be asking is why. Part of the answer is if you can't beat them, join them. And Macy's has been aggressively making strides to stake a claim in the digital space. This embracing of digital sales has had another welcome benefit. Consumers are buying online and when they go to pick-up their order at stores, they are making additional purchases. In their last earnings report, Macy’s cited a 25% increase in sales to customers in this scenario. What’s more, the Macy’s app seems to be providing customers with a good experience, including the ability to check prices, track purchases, conduct an online chat, and offering mobile wallet payments.

But digital growth is not the only reason analysts think Macy's may be able to stand up to Amazon. The company remains invested in its specialty beauty stores, Bluemercury as well as Macy's Backstage – a discount outlet brand. And, like many retailers, Macy's has had to close stores that are underperforming to help reduce costs and increase profits. While some analysts may wonder if Macy's is closing stores rapidly enough, there's a lot to like about the direction the company is headed. And with a P/E ratio of around 10, it's a competitive stock in this space.

About Macy's
Macy's, Inc., an omnichannel retail organization, operates stores, Websites, and mobile applications. The company sells a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. As of April 1, 2019, it operated approximately 680 department stores under the Macy's and Bloomingdale's names; and 190 specialty stores, such as Bloomingdale's The Outlet, Bluemercury, Macy's Backstage, and STORY in 43 states, the District of Columbia, Guam, and Puerto Rico. It also operated macys.com, bloomingdales.com, and bluemercury.com. In addition, the company offers licenses for its stores; and operates a beauty products and spa retailer under the bluemercury name. The company was formerly known as Federated Department Stores, Inc. and changed its name to Macy's, Inc. in June 2007. Macy's, Inc. was founded in 1830 and is based in Cincinnati, Ohio.

Current Price: $15.15
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 9 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $17.69 (16.7% Upside)

#3 - Callaway Golf Co. (NYSE:ELY)

Callaway Golf logo

Callaway Golf Co. (NYSE: ELY) - Who said golf is dead? Maybe it’s the Tiger effect, maybe it’s Nike's exit from the category, or maybe it's the growth of simulators and other programs that are beginning to take root to make the game more accessible to a younger market. Whatever the reason for the growth, the golf equipment, and accessories manufacturer has seen its stock climb approximately 71% in the 12 months that led up to its last earnings report. That growth is leaps and bounds ahead of the consumer discretionary market (4%) and the S&P 500 (18%) in that same period. So is it overvalued? Maybe not. Despite the massive jump, there was a pullback and shares sit slightly below their 52-week high. The stock has a P/E ratio of over 19 and is trading at 22x forward 12-month earnings estimates.

But the question for investors is where will the stock go? Full-year revenue estimates are projected to rise nearly 17% to $1.23 billion with adjusted earnings to rise to $1.00 per share (an 88.7% increase). Analysts love the stock which has received 10 upward earnings estimates for the rest of 2018 and 2019 and no downward estimates for the same timeframe.

About Callaway Golf
Callaway Golf Company, together with its subsidiaries, designs, manufactures, and sells golf clubs, golf balls, golf bags, and other golf-related accessories. The company operates through three segments: Golf Clubs; Golf Balls; and Gear, Accessories and Other. The Golf Clubs segment provides golf drivers and fairway woods, hybrids, irons and wedges, putters, packaged sets, and pre-owned golf clubs. The Golf Balls segment designs, manufactures, and sells golf balls. The Gear, Accessories and Other segment offers golf apparel and footwear, headwear, and other lifestyle and golf-related apparel products, as well as golf bags, golf gloves, travel gears, gears, personal storage gears, and accessories. The company sells its products through golf retailers, sporting goods retailers, mass merchants, Internet retailers, department stores, field representatives, and in-house sales representatives, as well as to third-party distributors in the United States and approximately 100 countries. Callaway Golf Company sells its products under the Callaway Golf, Odyssey, Strata, OGIO, and TravisMathew brand names. It also sells pre-owned golf products through its Website, callawaygolfpreowned.com; and Callaway Golf and Odyssey products through its Websites callawaygolf.com, odysseygolf.com, ogio.com, and travismathew.com. The company was founded in 1982 and is based in Carlsbad, California.

Current Price: $21.02
Consensus Rating: Buy
Ratings Breakdown: 6 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $23.19 (10.3% Upside)

#4 - Boot Barn Holdings Inc. (NYSE:BOOT)

Boot Barn logo

Boot Barn Holdings Inc. (NYSE: BOOT) - Another niche player that is enjoying a surge in their stock price is Boot Barn. In the last three years, the company has seen its shares rise nearly 30%. While this trails the S&P 500 over the same period, the same can’t be said for the last 12 months. In that time frame, the company’s stock price has shot up 237%. And while the stock is now sitting at right about its 52-week high, analysts are projecting growth on both its top and bottom lines, helping to fuel speculation that the stock still has room to grow.

The company has seemed to find a sweet spot between the opening of new stores and the trend towards positive consumer spending in the area of apparel. That was evident in the first quarter of 2018 when gross margins increased from 29.7% to 31.8%

In the current quarter, revenues are expected to reach $161.55 million, an increase of almost 13%. And on the top line, the company is expected to reach $757.54 million, an increase of nearly 12%. On the EPS front, Boot Barn is projecting their full-year EPS to reach $1.15 per share, an increase of over 64% from current levels. The estimates are supported by analysts many of whom are positively revising the stock’s earnings estimates.

About Boot Barn
Boot Barn Holdings, Inc., a lifestyle retail chain, operates specialty retail stores in the United States. The company's specialty retail stores offer western and work-related footwear, apparel, and accessories for men, women, and kids. It offers boots, shirts, jackets, hats, belts and belt buckles, handbags, western-style jewelry, rugged footwear, outerwear, overalls, denim, and flame-resistant and high-visibility clothing. The company also provides gifts and home merchandise. As of August 7, 2018, it operated 232 stores in 31 states. Boot Barn Holdings, Inc. also sells its products through e-commerce Websites, including bootbarn.com; sheplers.com; and countryoutfitter.com. The company was formerly known as WW Top Investment Corporation and changed its name to Boot Barn Holdings, Inc. in June 2014. Boot Barn Holdings, Inc. was founded in 1978 and is based in Irvine, California.

Current Price: $42.04
Consensus Rating: Buy
Ratings Breakdown: 7 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $38.27 (-9.0% Upside)

#5 - Five Below Inc. (NASDAQ:FIVE)

Five Below logo

Five Below Inc. (NASDAQ: FIVE) - For investors, there is an axiom that you either want to be a high-end retailer or a discount retailer. Five Below is one of the best at creating a discount experience that caters to both teenagers and parents alike. The stores are bright and loud. Their model is to sell items at a price of $5 or below, which makes them attractive to an audience of pre-teens and teenagers who are finding that discount can be chic. And in some cases, stores are loaded with items that are discounted beyond these already low prices.

In their latest earnings report, the company reported a 2% increase in same-store sales. And the company is not just relying on same-store sales. They plan to open more stores with an aggressive revenue growth target of 20% through 2020. While the company faces headwinds from the online convenience and low pricing of Amazon and, increasingly, Wal-Mart, Five Below seems to know its audience well and is catering an experience that captures those dollars well.

About Five Below
Five Below, Inc. operates as a specialty value retailer in the United States. It offers accessories, including novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and T-shirts, as well as nail polishes, lip glosses, fragrances, and branded cosmetics; and items used to complete and personalize living space, including glitter lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, and related items, as well as provides storage options for the customers room. The company also provides sport balls; team sports merchandise and fitness accessories, such as hand weights, jump ropes, and gym balls; games, including name brand board games, puzzles, collectibles, and toys covering remote control; and pool, beach, and outdoor toys, games, and accessories. In addition, it offers accessories, such as cases, chargers, headphones, and other related items for cell phones, tablets, audio, and computers; books, video games, and DVDs; craft activity kits; arts and crafts supplies that consist of crayons, markers, and stickers; and trend-right items for school comprising backpacks, fashion notebooks and journals, novelty pens and pencils, locker accessories, and everyday name brand items. Further, the company provides party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise products; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food; chilled drinks through coolers; and seasonally-specific items used to celebrate and decorate for events. It primarily serves tween and teen customers. As of February 2, 2019, Five Below, Inc. operated 750 stores. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was founded in 2002 and is headquartered in Philadelphia, Pennsylvania.

Current Price: $124.20
Consensus Rating: Buy
Ratings Breakdown: 14 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $140.00 (12.7% Upside)

#6 - Burlington Stores Inc. (NYSE:BURL)

Burlington Stores logo

Burlington Stores Inc. (NYSE: BURL) - What’s in a name? For Burlington Stores, it could be more a case of what’s not in their name. The company dropped the words “Coat Factory” from their name and investors seem to approve. Burlington Stores seeks to focus more on its line of beauty and women’s sportswear collections, making it no longer just a seasonal company (the company calls it “de-weatherizing). The company has also been opening new stores, which is unusual at a time when many brick-and-mortars are closing stores to shore up their bottom line. During the second quarter of 2018, they opened 18 new stores. For the entire fiscal year, the company plans to open between 35 and 40 new stores in addition to remodeling 34 others.

The company’s strong performance began in the fourth quarter of 2017 and has continued into 2018. Burlington Stores posted a solid first quarter where adjusted earnings reached $1.26 per share beating analysts’ estimates of $1.09. That was also a 59% increase from the same period in 2017. Revenue increased as well with net sales jumping nearly 13% to $1,518.4 million, which also beat estimates by a healthy margin.

About Burlington Stores
Burlington Stores, Inc. operates as a retailer of branded apparel products in the United States. The company offers fashion-focused merchandise, including women's ready-to-wear apparel, accessories, footwear, menswear, youth apparel, coats, toys, and gifts, as well as baby, home, and beauty products. As of February 2, 2019, it operated 661 stores under the Burlington Stores name; 2 Cohoes Fashions stores; 2 Super Baby Depot stores; 9 MJM Designer Shoes stores; and 1 online store in 45 states and Puerto Rico. The company was founded in 1972 and is headquartered in Burlington, New Jersey.

Current Price: $223.00
Consensus Rating: Buy
Ratings Breakdown: 15 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $230.17 (3.2% Upside)

#7 - TJX Cos. (NYSE:TJX)

TJX Companies logo

TJX Cos. (NYSE: TJX) - The question investors need to consider for TJX is if their stock is overpriced relative to their growth. The company has a business network that gives it the scale to sell their merchandise at prices 20-60% below traditional retailers and, in some cases, even being a lower option than Amazon and Wal-Mart. The company is also known for frequently rotating its merchandise, giving customers a continuous new selection of offerings. The stock price has reflected the strength of their business model, and reached an all-time high in August of 2018. Revenue rose to $9.3 billion (a 12% gain) and GAAP earnings increased to $1.17 per share. Both numbers beat expectations. And analysts are still forecasting that the stock has room to run with some projections of revenue growth reaching 12% for 2019. The one question may be a valuation that some may say is 26X this year’s earnings when you discount the tax reform boost. However, the valuation is in-line with competitors in this space, such as Ross Stores which trades at about 23x earnings. When you add in its dividend yield (currently about 1.6%), TJX looks to be a solid long-term growth stock for 2019.

About TJX Companies
The TJX Companies, Inc. operates as an off-price apparel and home fashions retailer. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX International. The company sells family apparel, including footwear and accessories; home fashions, such as home basics, furniture, rugs, lighting products, giftware, soft home products, decorative accessories, tabletop, and cookware, as well as expanded pet, kids, and gourmet food departments; jewelry and accessories; footwear; and other merchandise. It operates stores under the T.J. Maxx, Marshalls, HomeGoods, Winners, HomeSense, T.K. Maxx, and Sierra Trading Post names, as well as operates e-commerce sites tjmaxx.com, tkmaxx.com, and sierratradingpost.com. The company operates a total of approximately 4,300 stores in 9 countries, which included the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia. The TJX Companies, Inc. was founded in 1956 and is headquartered in Framingham, Massachusetts.

Current Price: $59.84
Consensus Rating: Buy
Ratings Breakdown: 15 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $64.67 (8.1% Upside)

#8 - Williams-Sonoma, Inc. (NYSE:WSM)

Williams-Sonoma logo

Williams-Sonoma, Inc. (NYSE: WSM)- Branding is an often mocked word among investors … until it works. And Williams-Sonoma is an example of how branding can boost a company’s image as well as its stock. Williams-Sonoma is one of the true practitioners of an omni-channel marketing strategy. This basically means that however, a customer chooses to engage with the company whether that's on their smartphone, tablet, through their printed catalog (yes, those still exist) or the in-store experience. Their experience will be the same. And for a company that is known for selling high-priced home furnishings and décor, that experience is essential to separating it from its competitors. The company also is the parent company of subsidiaries such as Pottery Barn, Pottery Barn for Kids and West Elm among others.

Although the stock had a rough couple of years in 2015 and 2016, it has started to rally in 2018 and at around $66 per share, it has room to run to meet its five-year high of $87.50.

About Williams-Sonoma
Williams-Sonoma, Inc. operates as a multi-channel specialty retailer of various products for home. It operates through two segments, E-commerce and Retail. The company offers cooking, dining, and entertaining products, including cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture, and a library of cookbooks under the Williams Sonoma brand, as well as home furnishings and decorative accessories under the Williams Sonoma Home brand; and furniture, bedding, bathroom accessories, rugs, curtains, lighting, tabletop, outdoor, and decorative accessories under the Pottery Barn brand. It also provides products designed for creating spaces where children could play, laugh, learn, and grow under the Pottery Barn Kids brand; line of furniture, bedding, lighting, decorative accents, and others for teen bedrooms, dorm rooms, study spaces, and lounges under the PBteen brand; and mixed clean lines, natural materials, and handcrafted collections under West Elm brand. In addition, the company offers a range of assortments of lighting, hardware, furniture, and home décor inspired by history under the Rejuvenation brand; and women's and men's accessories, small leather goods, jewelry, key item apparel, paper, entertaining and bar, home décor, and seasonal items under the Mark and Graham brand. It markets its products through e-commerce Websites, direct mail catalogs, and specialty retail stores. As of January 28, 2018, the company operated 631 stores comprising 586 stores in 43 states, Washington, D.C., and Puerto Rico; 24 stores in Canada; 19 stores in Australia; and 2 store in the United Kingdom, as well as 93 franchised stores and/or e-commerce Websites in various countries in the Middle East, the Philippines, and Mexico. Williams-Sonoma, Inc. was founded in 1956 and is headquartered in San Francisco, California.

Current Price: $70.38
Consensus Rating: Hold
Ratings Breakdown: 3 Buy Ratings, 13 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $66.29 (-5.8% Upside)

Despite rumors to the contrary, retail is not dead, and there are many options beyond Amazon and Wal-Mart that investors can choose to make money. This report shows you that if the niche players offer strong value, albeit in some cases with high valuations. While retail may not be a short-term delight for traders, any of the stocks in this report can be solid long-term investments moving as you look for growth into the future.

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