January 25, 2023

Despite economic uncertainties, retail sales have recently remained resilient. As the Fed is expected to slow rate hikes as inflation shows signs of cooling, holiday sales are expected to be strong. Therefore, it may be prudent to consider fundamentally strong retail stocks Walmart Inc. (WMT), The Hershey Company (HSY), Dillard’s, Inc. (DDS) and Movado Group, Inc. (MOV). Keep reading….



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After a year of macroeconomic and geopolitical challenges, inflation is starting to ease and the Fed is expected to slow the pace of rate hikes. Federal Reserve Chairman Jerome Powell said so smaller rate hikes are likely on the horizon and could start as early as this month.

Despite the high inflation, consumer spending has remained stable. According to the Department of Commerce, consumer spending rose 0.8% sequentially in October, recording its highest gain since June, driven by spending on rent, food and new vehicles. Also, the US Census Bureau reported that total retail sales in October increased 1.3% sequentially and 8.3% year over year.

The National Retail Federation (NRF) expects holiday retail sales to be between $942.60 billion and $960.40 billion in November and December, representing an increase of 6% and 8% year-over-year. NRF President and CEO Matthew Shay said, “In light of the recent challenges, many households will supplement their spending with savings and credit to provide a buffer and result in a positive holiday season.”

Against this backdrop, investors may want to consider fundamentally strong retail stocks Walmart Inc. (WMT), The Hershey Company (HSY), Dillards, Inc. (DDS), and Movado Group, Inc. (MOV).

Walmart Inc. (WMT)

WMT is engaged in operating retail, wholesale and other units around the world. The company operates through three segments: Walmart US, Walmart International and Sam’s Club.

Over the past three years, WMT’s dividend payments have grown at a CAGR of 1.9%. The four-year average dividend yield is 1.71% and the expected annual dividend of $2.24 per share translates into a yield of 1.48%. It is expected to pay a quarterly dividend of $0.56 per share on January 3, 2023.

On October 31, 2022, Popable, a marketplace platform for pop-up stores, and WMT announced a strategic partnership that will allow small businesses to rent retail space in WMT stores nationwide for short-term rentals. The partnership is believed to help small business owners thrive, keep excess inventory moving and create more built-in foot traffic. WMT will benefit from the use of its retail space.

For the fiscal third quarter ended October 31, 2022, WMT’s total revenues increased 8.7% year over year to $152.81 billion. Adjusted operating income increased 3.9% year over year to $6.02 billion. In addition, it has been modified eps came in at $1.50, up 3.4% from the year-ago quarter.

WMT’s revenue for the quarter ended January 31, 2023 is expected to grow 4.1% year-over-year to $157.76 billion. Earnings per share for the quarter ended April 30, 2023 is expected to grow 9% year over year to $1.42.

The company has an impressive history of earnings surprises, beating consensus earnings per share estimates in three of the last four quarters. The stock is up 4.8% year-to-date to close out the last trading session at $151.65.

WMTs POWR ratings reflect solid outlook. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system. The POWR Ratings rate stocks on 118 different factors, each with its own weighting.

Within the A rating Grocery / Big Box Retailers industry, it ranks number 8 out of 39 stocks. The company has an A grade for Sentiment and a B for Stability and Quality.

click here to see WMT’s additional POWR ratings for growth, value, and momentum.

The Hershey Company (HSY)

HSY is engaged in the production and sale of confectionery and stock items worldwide. The company operates in three segments: North American Confectionery, North American Salty Snacks and International.

Over the past three years, HSY’s dividend payments have grown at a CAGR of 9%. The four-year average dividend yield is 2.01% and the expected annual dividend of $4.14 per share translates into a yield of 1.78%. It is expected to pay a quarterly dividend of $1.04 per share on December 15, 2022.

On November 17, 2022, HSY announced its progress towards its commitment to act on climate change. The company’s recent initiatives include the launch of a third utility-scale solar project, investments in energy and water optimization, and continued progress in addressing land-use change.

HSY’s 2021 ESG report said it had reduced its Scope 1 and 2 emissions by 48 percent and Scope 3 emissions by 18 percent from a 2018 baseline.

For the fiscal third quarter ended October 2, 2022, HSY’s non-GAAP gross profit increased 10.8% year over year to $1.16 million. Non-GAAP operating profit increased 9.3% over the same period last year to $615.29 million. Non-GAAP net income increased 2.8% year over year to $447.07 million. In addition, non-GAAP EPS came in at $2.17, up 3.3% from the same quarter last year.

HSY’s earnings per share and revenue for the quarter ended December 31, 2022 are expected to grow 5% and 10.7% year over year to $1.77 and $2.57 billion, respectively. It has a commendable history of earnings surprises, beating consensus earnings per share estimates in each of the next four quarters. The stock has gained 20.6% year-to-date to close out the last trading session at $233.25.

It’s no surprise that HSY has an overall rating of B, which translates to a buy in our proprietary rating system. It ranks 26 out of 82 stocks in the B rating Food makers industry. In addition, it has a B grade for quality.

To see HSY’s additional assessments for growth, value, momentum, stability and sentiment, click here.

Dillard’s, Inc. (DDS)

DDS operates department stores in the Southeastern, Southwestern, and Midwestern regions of the United States. The stores offer merchandise, fashion apparel, accessories, cosmetics, home furnishings, and other consumer goods.

Over the past three years, DDS dividend payments have grown at a CAGR of 21.1%. The four-year average dividend yield is 2.15% and the expected annual dividend of $0.80 per share translates to a return of 0.22%. It is expected to pay a quarterly dividend of $0.20 per share on January 30, 2023.

On August 15, DDS announced the debut of Courtney Grow for Antonio Melani. It contains high-quality pieces for fall and transitional wear, such as dresses, sportswear, jackets, shoes and a handbag.

With this initiative, Courtney Grow for Antonio Melani, one of Dillard’s limited edition collaborations with significant social media impact, aims to foster brand recognition and fashion passion through unique and intriguing partnerships with tastemakers, attracting new customers while increasing adherence to the exclusive brands. of Dillard enlarge .

For the fiscal third quarter ended October 29, 2022, DDS net sales increased 4% year over year to $1.57 billion. The company’s total assets increased 1.4% year over year to $3.79 billion. Earnings per share were $10.96, an increase of 11.7% over the same period last year.

DDS EPS and revenue for fiscal 2023 are expected to grow 6.5% and 5% year over year to $42.64 and $6.96 billion, respectively. It has an impressive history of earnings surprises, beating consensus earnings per share estimates in each of the next four quarters. The stock is up 43.7% year-to-date to close out its last trading session at $352.16.

DDS’s POWR ratings reflect a solid outlook. The company has an overall rating of B, which equates to a buy. It ranks number 4 out of 66 stocks in the Fashion & Luxury industry. In addition, it has an A rating for Quality and a B for Value.

click here to see DDS’s other ratings for growth, momentum, stability and sentiment.

Movado Group Inc. (MOV)

MOV designs, sources, sells and distributes watches worldwide. The company operates in two segments, watch and accessory brands and corporate stores. It offers its watches under the brands Movado, Concord, Ebel, Olivia Burton and MVMT, as well as licensed brands, such as Coach, Tommy Hilfiger, HUGO BOSS, Lacoste, Calvin Klein and Scuderia Ferrari.

Over the past three years, MOV’s dividend payments have grown at a CAGR of 20.5%. The four-year average dividend yield is 2.82% and the expected annual dividend of $1.40 per share translates into a yield of 4.46%. It is expected to pay a quarterly dividend of $0.35 per share on December 16, 2022.

MOV’s non-GAAP net sales for the nine months ended October 31, 2022 increased 5.9% year over year to $557.63 million. The company’s non-GAAP gross profit increased 8.9% year over year to $324.64 million. Non-GAAP net income attributable to MOV increased 18.2% year over year to $73.53 million. In addition, non-GAAP EPS came in at $3.19, up 21.3% from the same period last year.

Analysts expect MOV’s earnings per share and revenue for fiscal 2023 to grow 1.8% and 1.3% year over year to $4.01 and $742 million, respectively. The company has an impressive history of earnings surprises, beating consensus earnings per share estimates in each of the next four quarters. Over the past three months, the stock is down 1.6% to close out its last trading session at $31.45.

MOV’s positive outlook is reflected in the POWR ratings. The company has an overall rating of B, which equates to a buy. It ranks #8 in the same industry. Plus, it has an A rating for value and quality.

click here to see MOV’s additional assessments for growth, momentum, stability and sentiment.


WMT shares traded Tuesday morning at $150.59 per share, down $1.06 (-0.70%). Year-to-date, WMT has gained 5.32%, versus a -15.81% increase in the benchmark S&P 500 index over the same period.


About the author: Malaika Alphonsus

Malaika’s passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in economics and psychology, she wants to help investors make informed investment decisions.

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