Seven Hot Retail Stocks

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Fourth-quarter retail earnings season kicked off last week with mixed results from Abercrombie & Fitch
ANF
and Nordstrom
JWN
. Many more retailers will post their results this week and next, including Walmart
WMT
, Home Depot
HD
, Macy's
M
, Barnes & Noble
BKS
and Safeway
SWY
.
See also: Earnings Expectations for the Week of February 20
While we wait for results to come in, here are a few retail stocks that are on roll now. Their share prices are more than 20% higher than at the beginning of the year. They all have market caps of more than $1 billion, and they all offer dividends too.
Advance Auto PartsAAP
is trading almost 23% higher year to date due in part to a nearly 7% pop last week after the company posted better-than-expected quarterly results. The company opened 99 new stores last year. The $6.2 billion market cap company has a dividend yield of 0.3%. Its P/E and PEG ratios are less than the industry average. The stock has outperformed peers AutoZone
AZO
and O'Reilly Automotive
ORLY
over the past six months.
Companhia Brasileira de Distribuicao
's
CBD
share price is about 29% higher year to date, including an 8% rise last week. The second biggest retailer in Latin America operates more than 1,600 hypermarkets, supermarkets, department stores and convenience stores in Brazil. Its dividend yield is 0.9%, the market cap is $12.2 billion and the long-term EPS growth forecast is 30.8%. The stock has outperformed Costco
COST
and Walmart over the past year.
Finish LineFINL
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is up about 23% year to date and reached a new 52-week high on Friday. But short interest is 10.8% of the float, and the company has been a rumored takeover target. The Indianapolis-based footwear retailer has a return on equity of 15.9% and its operating margin is better than the industry average. The market cap is $1.2 billion. But over the past six months, the stock has underperformed Dick's Sporting Goods
DKS
and Foot Locker
FL
.
GapGPS
is trading near a 52-week high and is more than 22% higher year to date. Better-than-expected sales numbers and optimistic guidance pushed the share price up more than 10% at the beginning of the month. The San Francisco-based retailer has a market cap of $11.1 billion and its dividend yield is 1.9%. The return on equity is 27.9%. Over the past six months, the stock has outperformed competitors Abercrombie & Fitch and American Eagle Outfitters
AEO
.
JCPenneyJCP
is more than 22% higher year to date, though shares have traded mostly between $41 and $43 for the past three weeks. The company lately has been embroiled in controversy over its spokesperson Ellen DeGeneres. The dividend yield is 1.8% and the market cap is $9.1 billion. The long-range EPS growth forecast is 16.3%. But short interest is 17.2% of the float. Over the past six months, the stock has outperformed rivals Macy's and Kohl's
KSS
.
Luxottica GroupLUX
shares are trading up more than 21% year to date and have almost returned to the 52-week high from last April. The Italian eyewear maker saw double-digit sales growth in the fourth quarter and is scheduled to post full-year results February 28. The company has a market cap of $15.9 billion and the dividend yield is 1.8%. Its long-term EPS growth forecast is 14.0%. Over the past six months, the stock has outperformed the Dow and the S&P 500.
Penske Automotive GroupPAG
shares are trading more than 25% higher than at the beginning of the year. The stock hit a multiyear high last week after the auto retailer posted a 67% jump in profit for the fourth quarter. Penske has a dividend yield of 0.4%, the long-term EPS growth forecast is 18.1% and the P/E ratio is less than the industry average. Over the past six months, the stock has outperformed competitors AutoNation
AN
and CarMax
KMX
.
ACTION ITEMS: Bullish: Investors interested in exchange traded funds focused on retail might want to consider the following trades:
  • Direxion Daily Retail Bull 3X Shares RETL is about 24% higher year to date.
  • SPDR S&P Retail XRT is about 12% higher year to date.
  • PowerShares Dynamic Retail Portfolio FundPMR is more than 10% higher year to date.
  • Market Vectors Retail ETF RTH is almost 7% higher year to date.
Bearish: Traders may prefer to consider this alternative position:
  • Direxion Daily Retail Bear 3X Shares RETS is trading near a 52-week low.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
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Posted In: Long IdeasShort IdeasTrading IdeasETFsabercrombie & fitchadvance auto partsAmerican Eagle OutfittersAutoNationAutoZoneBarnes & NobleCarmaxCompanhia Brasileira de DistribuicaoCostcoDick’s Sporting Goodsdividend stocksfinish linefoot lockerGAPhome depotjcpenneyKohl’sLuxotticaMacy’sNordstromO’Reilly AutomotivePenske Automotiveretail earningsretail ETFsRetail StocksSafewayWalmart
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