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Market May Hit New Highs: 4 Retail Growth Stocks to Buy

Zacks

Barring a few hiccups, the U.S. stock market has displayed a decent run. The Dow Jones Industrial Average has advanced 11.9%, the S&P 500 has gained 11.5%, while the tech-laden Nasdaq Composite Index has surged 18.9% so far in the year. With plenty of developments — weakening of Hurricane Irma, easing tensions over North Korea and the launch of Apple’s AAPL iPhone 8 and iPhone X —the rally is expected to continue.

Though the stock market currently looks bullish, one can’t ignore the fact that the three major indices are trading close to their 52-week highs that is at lofty valuations. If the major indices breach their set benchmark, it is likely to boost the risk appetite of investors.

Until this happens, you can fine tune your portfolio with growth stocks. These are generally hot and flourishing stocks with earnings growth potential. Among the 16 Zacks categorized sectors, we are focusing on Retail-Wholesale. The sector has gained 18.2% so far in the year and has comfortably outperformed the S&P 500. Although the sector occupies the bottom most position in the Zacks classified list it still holds promise given the favorable economic indicators.

The rebound in oil prices from all-time lows, improving labor market, and rising housing market and manufacturing sector signal that the economy is on a recovery mode. These factors are favorable for retailers. Steady job additions and gradual wage acceleration boost consumer confidence. We expect this positive sentiment to translate into higher consumer spending that may help increase sales in the current retail landscape, which is witnessing a sea change with the focus gradually shifting to online shopping.


Check These 4 Growth Stocks

Here we have highlighted four Retail/Wholesale stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B. These stocks are backed by sound fundamentals, surging share price and a track record of better-than-expected results. Not only this, these stocks have outperformed their respective industries.

Rush Enterprises, Inc. RUSHA has emerged as a strong contender with a long-term earnings growth rate of 15% and a Growth Score of A. In a year, the stock has surged roughly 80.8%, comfortably outperforming the industry’s growth of 7.8%. This integrated retailer of commercial vehicles and related services delivered an average positive earnings surprise of 27% in the trailing four quarters and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

We also suggest investing in Movado Group, Inc. MOV with a Growth Score of B. In a year, this Zacks Rank #1 stock has surged roughly 30.4%, while the industry witnessed an increase of 15.8%. This designer, developer, marketer and distributor of fine watches delivered an average positive earnings surprise of 2.5% in the preceding four quarters.

Another lucrative option is PetMed Express, Inc. PETS, which operates as a pet pharmacy in the United States. The stock has a long-term earnings growth rate of 10% and a Growth Score of A. The company has delivered an average positive earnings surprise of 10.8% in the trailing four quarters and carries a Zacks Rank #2. We note that, in a year, the stock has advanced approximately 86.9%, while the industry has gained 42%.

Investors can count on Herbalife Ltd. HLF, which develops and sells weight management, sports and fitness, and nutritional and personal care products. The company pulled off an average positive earnings surprise of 25.1% in the trailing four quarters and has a Growth Score of A. In the trailing six months, this Zacks Rank #2 stock has exhibited a bullish run and surged roughly 28.4%, while the industry declined 1.5%.

More Stock News: This Is Bigger than the iPhone!

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