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Investors Eye Promising Retail Stocks as Consumer Confidence Rises
Key Insights
- Sprouts Farmers Market, Deckers Outdoor, Chewy, and Torrid Holdings are strong retail stocks recommended for purchase.
- The retail sector may see gains as U.S. consumer confidence has risen for the last two months, reaching an 18-month high.
- Sign up to access our 7 Best Stocks for the Next 30 Days report—available for free today!
U.S. consumer confidence, a crucial indicator of economic health, has improved for two consecutive months. The Conference Board reports that the Consumer Confidence Index climbed to 111.7 in November 2024, following a revision that put October’s figure at 109.6. This positive shift suggests increased optimism among consumers, likely due to reduced inflation and stronger hiring trends.
As consumer sentiment rises, retailers like Sprouts Farmers Market, Inc. (SFM), Deckers Outdoor Corporation (DECK), Chewy, Inc. (CHWY), and Torrid Holdings Inc. (CURV) stand to benefit from the anticipated boost in consumer spending. These companies are well-prepared to respond to the growing consumer appetite for their products.
Consumer confidence is currently at a 16-month high. The recent victory of Donald Trump may have also contributed to this increase. The Present Situation Index, which assesses current business and job market conditions, rose by 4.8 points to 140.9. Meanwhile, the Expectations Index, reflecting consumers’ short-term outlook on income and employment, increased by 0.4 points to 92.3.
With greater confidence, consumers are expected to make larger purchases, enhancing economic growth. Furthermore, the Federal Reserve’s monetary policy adjustments, particularly the reduction of benchmark borrowing rates, support a positive consumer environment.
Recent Stock Performance of SFM, DECK, CHWY & CURV
Image Source: Zacks Investment Research
Highlighted Retail Stocks
Sprouts Farmers: Expanding in the Natural & Organic Market
Sprouts Farmers focuses on innovation, technology, and marketing, offering competitive pricing that benefits the company. Steadily increasing its presence in the natural and organic markets, Sprouts is responding to strong consumer demand. Its unique health-oriented product lines attract various customers, driving sales growth. Additionally, substantial investments in e-commerce and delivery services cater to the rising demand for convenience.
The Zacks Consensus Estimate predicts that Sprouts Farmers’ current year sales and earnings per share (EPS) could grow by 12.2% and 29.6%, respectively, compared to last year. As a Zacks Rank #1 (Strong Buy) company, it has historically surprised earnings by an average of 15.3% over the last four quarters.
Deckers: Success with HOKA and UGG Brands
Deckers continues to enhance its brand presence and cultivate direct-to-consumer sales channels, contributing to robust sales growth. Its strategic push into international markets, especially in the Asia-Pacific region, combined with a focus on premium products, positions DECK favorably in a competitive market.
For the current financial year, the Zacks Consensus Estimate forecasts that Deckers’ sales and EPS will increase by 13.6% and 12.6%, compared to the previous year. This company also holds a Zacks Rank #1 and has an impressive trailing four-quarter earnings surprise of 41.1%.
Stay updated on EPS estimates and surprises via Zacks Earnings Calendar.
Chewy: Growth Through Autoship and Veterinary Services
Chewy benefits from a growing customer base and a recurring revenue model, providing a solid foundation for expansion. The company has expanded its services to include veterinary care and pharmacy options. These additions not only enhance Chewy’s profitability but also attract and retain customers. The Autoship program allows for easy repeat purchases, ensuring a steady revenue stream.
Current year estimates suggest that Chewy’s sales will grow 6.8%, with EPS jumping by 65.2% compared to last year. As a Zacks Rank #2 (Buy) company, Chewy has averaged a surprising 50.9% in earnings over the past four quarters.
Torrid Holdings: Leading the Plus-Size Fashion Sector
Torrid has carved out a niche in the plus-size fashion industry by prioritizing comfort, fit, and style that meets customer needs. The innovative strategies appeal to younger shoppers while reinforcing loyalty among long-time customers. With convenient shopping options like in-store pickups and direct shipping, Torrid is well-positioned for growth.
For the current financial year, the Zacks Consensus Estimate for Torrid’s EPS indicates an impressive 81.8% growth compared to the previous year. Holding a Zacks Rank #2, the company has consistently surprised earnings by 43.9% over the last four quarters.
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Deckers Outdoor Corporation (DECK): Access the Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM): Access the Free Stock Analysis Report
Chewy (CHWY): Access the Free Stock Analysis Report
Torrid Holdings Inc. (CURV): Access the Free Stock Analysis Report
For more details, read the full article on Zacks.com.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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