Seven Hot Retail Stocks
Fourth-quarter retail earnings season kicked off last week with mixed results from Abercrombie & Fitch (NYSE: ANF) and Nordstrom (NYSE: JWN). Many more retailers will post their results this week and next, including Walmart (NYSE: WMT), Home Depot (NYSE: HD), Macy's (NYSE: M), Barnes & Noble (NYSE: BKS) and Safeway (NYSE: SWY).
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 Parts (NYSE: AAP) 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 (NYSE: AZO) and O'Reilly Automotive (NASDAQ: ORLY) over the past six months.
Companhia Brasileira de Distribuicao's (NYSE: 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 (NASDAQ: COST) and Walmart over the past year.
Finish Line (NASDAQ: FINL) 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 (NYSE: DKS) and Foot Locker (NYSE: FL).
Gap (NYSE: GPS) 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 (NYSE: AEO).
JCPenney (NYSE: JCP) 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 (NYSE: KSS).
Luxottica Group (NYSE: LUX) 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 Group (NYSE: PAG) 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 (NYSE: AN) and CarMax (NYSE: KMX).
Bullish: Investors interested in exchange traded funds focused on retail might want to consider the following trades:
- Direxion Daily Retail Bull 3X Shares (NYSE: RETL) is about 24% higher year to date.
- SPDR S&P Retail (NYSE: XRT) is about 12% higher year to date.
- PowerShares Dynamic Retail Portfolio Fund(NYSE: PMR) is more than 10% higher year to date.
- Market Vectors Retail ETF (NYSE: RTH) is almost 7% higher year to date.
Traders may prefer to consider this alternative position:
- Direxion Daily Retail Bear 3X Shares (NYSE: RETS) is trading near a 52-week low.
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