It has been a mushy month for major indexes, with quite a few factors acting as deterrents. The COVID-19 pandemic, rising jobless claims, uncertainties surrounding the new stimulus bill as well as the upcoming elections are some of the contentious issues clouding the market and raising investors’ apprehension.
The Dow Jones Industrial, the tech-laden Nasdaq composite and the S&P 500 have declined 5.9%, 8.2% and 6.8%, respectively, in the past month. On a month-to-date basis, the indexes have slipped 5.7%, 10% and 7.4%, respectively.
Investors are rattled by the rising COVID-19 cases, more so with no immediate vaccine in the making. Moreover, matters related to the new stimulus bill seem to have become complicated due to the passing of Supreme Court Justice Ruth Bader Ginsburg. This is even more concerning considering that jobless claims have been on the rise lately. For the week ended Sep 19, jobless claims rose to 870,000, higher than the market’s expectation of 840,000. Also, political tensions related to the upcoming presidential election and strained relations with China are concerns.
It’s difficult to predict how things will turn out in the near term. Nonetheless, Fed officials have been emphasizing on another stimulus package to safeguard the economy. In fact, stimulus support is important for providing greater impetus to consumer spending, as witnessed earlier. Markedly, the retail sector is among the many beneficiaries of the financial aid.
There is no doubt that the retail space has been in distress due to the adversities emerging from the pandemic. However, matters are gradually taking a turn. In fact, reopening of state economies is enabling consumers resume shopping. Moreover, by streamlining supply-chain operations, shuttering underperforming stores and adapting to consumers’ growing digital inclination, retail players have managed to stay afloat.
Well, these aspects make the retail arena a viable option for parking funds. Let’s see what strategy investors should apply amid the current scenario, while scooping up stocks from this space to keep their portfolio unaffected.
Why Consider Value Investing?
Value investing is essentially about selecting stocks that have good things going for them at a time when they have been beaten down by some external factor, such as the pandemic. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount.
All said, with the help of the Zacks Stock Screener, we have zeroed in on four value stocks in the retail space that are worth buying. Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) when combined with a Value Score of A or B have better potential. Notably, each of these stocks outperformed the S&P 500 composite on a year-to-date basis.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy Co., Inc. BBY is a stock worth betting on. The stock sports a Zacks Rank #1 and has a Value Score of A. The provider of technology products, services and solutions has a trailing four-quarter earnings surprise of 33.5%, on average. It has a long-term earnings growth rate of 8.5%. Moreover, the Zacks Consensus Estimate for the company’s current financial year sales and earnings indicates growth of 3.8% and 17.3%, respectively, from the prior-year period’s levels.
DICKS Sporting Goods, Inc. DKS with a long-term earnings growth rate of 4.8% is also a solid bet. The stock flaunts Zacks Rank #1 and a Value Score of A. This sports goods retailer has a trailing four-quarter earnings surprise of 15.5%, on average. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates an improvement of nearly 3% each, respectively, from the year-ago period’s numbers.
You may invest in Big Lots, Inc. BIG. The stock has a Zacks Rank #2 and a Value Score of A. The broad-line retailer has a trailing four-quarter earnings surprise of 54.3%, on average. It has a long-term earnings growth rate of 7.1%. The Zacks Consensus Estimate for its current financial year sales and earnings indicates an increase of 13.7% and 85.6%, respectively, from the year-ago period’s levels.
We also suggest investing in The Kroger Co. KR, which has a long-term earnings growth rate of 6.2%. This supermarkets and multi-department stores operator has a trailing four-quarter earnings surprise of 12.9%, on average. The stock has a Zacks Rank #2 and a Value Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests an improvement of 8.2% and 46.8%, respectively, from the year-ago period’s levels.
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Best Buy Co., Inc. (BBY) : Free Stock Analysis Report
Big Lots, Inc. (BIG) : Free Stock Analysis Report
DICKS Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
The Kroger Co. (KR) : Free Stock Analysis Report
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