Despite lingering recessionary fears, consumer sentiment remains strong, with anticipations of robust consumer spending in the holiday season. Hence, quality retail stocks, Walmart (WMT), Ulta Beauty (ULTA), Movado Group (MOV), and J. Jill (JILL), could be worth watching this holiday season. Read on….
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Despite high inflation and lingering recessionary fears, consumer sentiment remains strong. As per the National Retail Federation, holiday spending is expected to be healthy even with economic challenges. The holiday retail sales between November and December would grow between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion.
NRF President and CEO Matthew Shay said, “In the face of the recent challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”
Furthermore, as per Statista, total U.S. retail sales in 2022 are forecasted to come in at $4.86 trillion, up by $53 billion from the prior year.
Given this backdrop, it might be wise to add fundamentally strong retail stocks Walmart Inc. (WMT), Ulta Beauty, Inc. (ULTA), Movado Group, Inc. (MOV), and J. Jill, Inc. (JILL) to your watchlist this holiday season.
Walmart Inc. (WMT)
WMT operates retail, wholesale, and other units worldwide and offers an assortment of merchandise and services at everyday low prices (EDLP). The company operates through three segments Walmart U.S.; Walmart International; and Sam’s Club.
Recently, WMT’s drone delivery took flight in Arizona with DroneUp. Earlier, WMT had announced its plans to expand its DroneUp network to reach four million additional households across six states, including Arizona. The new offering should benefit the company’s prospects.
On October 31, WMT and Popable, a pop-up shop marketplace platform, announced a strategic partnership that allows small businesses to rent retail space in WMT stores across the country for short-term leasing. This could be strategically beneficial for WMT.
For the fiscal third quarter ended October 31, WMT’s total revenues increased 8.7% year-over-year to $152.81 billion. Its adjusted operating income increased 3.9% year-over-year to $6.02 billion. In addition, its adjusted EPS came in at $1.50, representing a 3.4% increase from the year-ago quarter.
WMT’s revenue for the first quarter ending April 2023 is expected to increase 3.5% year-over-year to $145.17 billion. Its EPS for the same period is expected to grow 8.6% year-over-year to $1.41. The company has an impressive earnings surprise history as it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 20.7% over the past six months to close the last trading session at $142.80. Moreover, it gained 6.3% over the past three months.
WMT’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Stability and Sentiment. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #8 out of 39 stocks.
Click here to see the additional POWR Ratings of WMT for Growth, Value, Momentum, and Quality.
Ulta Beauty, Inc. (ULTA)
ULTA operates as a retailer of beauty products and offers cosmetics, fragrances, skincare and haircare products, bath and body products, salon styling tools, professional hair products, salon services, and nail services.
ULTA’s net sales increased 17.2% year-over-year to $2.34 billion for the third quarter ended October 29, 2022. The company’s gross profit increased 22% year-over-year to $962.82 million. Its net income increased 27.5% year-over-year to $274.59 million. Also, its EPS came in at $5.34, representing an increase of 35.5% year-over-year.
The company raised its fiscal year 2022 outlook. The company expects its net sales to come in between $9.95 billion and $10.00 billion and EPS between $22.60 and $22.90.
Analysts expect ULTA’s EPS and revenue for the fiscal fourth quarter ending January 2023 to increase 2.4% and 10.1% year-over-year to $5.54 and $3.01 billion. It has surpassed its EPS and revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 15.6% over the past year to close the last trading session at $440.51. It is up 4.3% over the past three months.
It’s no surprise that ULTA has an overall rating of B, equating to Buy in our POWR Ratings system.
ULTA has an A grade for Quality and a B for Sentiment. ULTA is ranked #13 out of 46 stocks in the Specialty Retailers industry.
Click here to access ULTA’s Growth, Value, Momentum, and Stability ratings.
Movado Group, Inc. (MOV)
MOV designs, sources, markets, and distributes watches worldwide and provides after-sales and shipping services. The company operates in two segments: Watch and Accessory Brands; and Company Stores.
For the fiscal third quarter ended October 31, MOV’s net sales came in at $211.40 million, while its gross profit came in at $121.03 million. In addition, non-GAAP net income attributable to came in at $29.83 million. The company’s non-GAAP EPS came in at $1.31.
Furthermore, MOV’s current assets increased to $563.88 million for the period ended October 31, 2022, compared to $536.15 million for the period ended October 31, 2021.
For fiscal 2023, MOV expects net sales in the range of approximately $740 million to $750 million and operating income in the range of $120 million to $125 million. The company expects gross profit to continue to be approximately 58% of net sales.
Analysts expect MOV’s EPS to increase 1.8% year-over-year to $4.01 for the fiscal year ending January 2023. The consensus revenue estimate of $742 million for the same period indicates a 1.3% year-over-year increase. In addition, it has topped the consensus EPS estimates in each of the trailing four quarters.
Over the past month, the stock has declined 3.7% to close the last trading session at $29.27.
MOV’s POWR Ratings reflect the company’s promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
MOV is also rated an A in Value and Quality. Within the 66-stock Fashion & Luxury industry, it is ranked #7.
To see additional POWR Ratings for Sentiment, Growth, Stability, and Momentum for MOV, click here.
Jill, Inc. (JILL)
JILL operates as an omnichannel retailer of women’s apparel under the J. Jill brand in the United States. It offers two sub-brands extensions of its brand aesthetic: Pure Jill and Wearever.
JILL’s gross profit came in at $105.02 million for the third quarter that ended October 29, 2022, up marginally year-over-year. The company’s current assets came in at $184.68 million for the period ended October 29, 2022, compared to $123.25 million for the period ended January 29, 2022.
Adjusted net income per share attributable increased 18.5% year-over-year to $0.77 for the quarter ended October 29, 2022.
For fiscal 2022, JILL expects its revenues to grow between 4% and 5% compared to fiscal 2021 and for adjusted EBITDA to be in the range of $103 million and $105 million.
Analysts expect JILL’s revenue to increase 4.4% year-over-year to $610.70 million in the fiscal year ending January 2023. Also, its EPS is estimated to increase 37.1% year-over-year to $2.92 for the same period. It has surpassed EPS estimates in all four trailing quarters.
Over the past year, the stock has gained 40.5% to close the last trading session at $22.62. Moreover, the stock gained 36.3% over the past three months.
JILL’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system.
JILL has an A grade for Sentiment and Quality. It is ranked #2 in the Fashion & Luxury industry.
Click here to see the additional POWR Ratings for JILL (Stability, Growth, Value, and Momentum).
WMT shares were trading at $143.99 per share on Tuesday morning, up $1.19 (+0.83%). Year-to-date, WMT has gained 1.08%, versus a -19.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.
Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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