Zacks analyst blog spotlights Dollar Tree, Ulta Beauty, Boot Barn Holdings and The Kroger
For immediate release
Chicago, IL – July 20, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: Dollar Tree, Inc. DLTR, Ulta Beauty, Inc. ULTA, Boot Barn Holdings, Inc. BOOT and The Kroger Co. KR.
Here are highlights from Tuesday’s analyst blog:
4 Must-Have Stocks As Retail Sales Rise Amid Higher Inflation
Consumer spending, which is a key driver of the economy, held up last month as Americans spent more on goods amid rising inflation. This is evident in retail sales data for the month of June, which rebounded from a decline in May. The Commerce Department said U.S. retail and food service sales in June rose 1% in sequence to $680.6 billion, after a reading revised up 0.1% recorded in May.
A robust labor market and decent household finances, thanks to stimulus checks received at the height of the pandemic, have provided consumers with some protection from inflationary pressures. But the question for industry experts is how long will this last, as soaring commodity and gasoline prices and rising interest rates have already began to pinch the pockets of consumers. These also raise concerns about the health of the US economy.
We note that the consumer price index increased by 1.3% month on month in June, after rising by 1% in May. Year-over-year, the measure rose 9.1% – the fastest pace since November 1981. The jump was driven by higher gasoline and food grain prices, mainly due of the conflict between Russia and Ukraine. That’s enough for the Federal Reserve to take a more aggressive stance.
Sales by category
The Commerce Department report suggests that sales at motor vehicle and parts dealers and furniture and home furnishings stores rose 0.8% and 1.4%, respectively, on a sequential basis. Sales at electronics and appliance stores rose 0.4%, while those at miscellaneous retailers rose 1.4%. Again, non-store retailer sales increased 2.2%.
Sales at food and beverage stores rose 0.4%, while those at food services and drinking places rose 1%. At sporting goods, hobby, musical instrument and book stores, sales rose 0.8%. At the same time, gasoline station revenues rose 3.6%, boosted by high gasoline prices.
The report also indicates that sales at building materials and supplies dealers fell 0.9%, while those at clothing and clothing accessories stores fell 0.4%. Sales at health and personal care stores fell 0.1%, while those at general merchandise stores fell 0.2%.
4 important choices
Investors can rely on Dollar Tree, Inc. The Chesapeake, Va.-based company’s strategic initiatives, including assortment expansion to $3 and $5 Plus at Dollar Tree stores, as well as combo stores and H2 renovations at Family Dollar, provide huge opportunities to drive sales and traffic.
Impressively, Dollar Tree has a four-quarter earnings surprise of 13.1%, on average. This discount variety store operator has an estimated long-term earnings growth rate of 15.5%. Zacks’ consensus estimate for Dollar Tree’s current year sales and EPS suggests growth of 6.7% and 40.5%, respectively, over the prior year period. The stock sports a Zacks rank of No. 1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.
Another stock to consider is Ulta Beauty, Inc. The company strengthened its omnichannel business and explored the potential of physical and digital facets. He has implemented various tools to improve the customer experience, such as offering a virtual try-on tool and in-store training, and reinventing fixtures, among others. Ulta Beauty is focused on providing customers with a curated and exclusive range of beauty products through innovation.
Impressively, this beauty retailer and leading beauty destination for cosmetics, fragrances, skin care products, hair care products and salon services has a surprise four-quarter earnings of 49, 8%, on average. We note that this Zacks #1 ranked company has an estimated long-term earnings growth rate of 10.7%. Zacks’ consensus estimate for Ulta Beauty’s current fiscal year sales suggests growth of 10.3% over the prior year period.
You can invest in Boot Barn Holdings, Inc. This lifestyle retailer of western and work footwear, apparel and accessories has successfully navigated a challenging environment, thanks to merchandising strategies, omnichannel capabilities and better spend and marketing management. This, combined with the expansion of the store base, helped Boot Barn Holdings gain market share and strengthen its position in the industry.
This Zacks #2 (Buy) company has an estimated long-term earnings growth rate of 20%. Zacks’ consensus estimate for Boot Barn Holdings’ current year sales and EPS suggests growth of 17% and 4.4%, respectively, over the prior year period.
The Kroger Company. is another potential choice. The company, which operates in the low-margin grocery industry, has undergone a complete overhaul not only in terms of products, but also in terms of how consumers prefer to shop.
The company has added new products and is considering technology expansion to improve its omnichannel reach. Kroger has made significant investments to improve product freshness and quality and expand digital capabilities. Impressively, the company introduced new items to its “Our Brands” portfolio.
Kroger has a four-quarter earnings surprise of 20.3% on average. The company has an estimated long-term earnings growth rate of 11.3%. Zacks’ consensus estimate for Kroger’s current-year sales and EPS suggests growth of 6.7% and 6.3%, respectively, over the prior-year period. The stock carries a No. 2 Zacks rank.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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