For Immediate Release
Chicago, IL – August 12, 2022 – Zacks Equity Research shares TTM Technologies TTMI as the Bull of the Day and Signet Jewelers SIG asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Dollar General Corp. DG, Dollar Tree, Inc. DLTR and Costco Wholesale Corp. COST.
Here is a synopsis of all five stocks:
Bull of the Day:
This rally has been wonderful for those of us fortunate to hold four-letter tickers. The NASDAQ Composite surged 20% off the lows, helping to push up stocks throughout the tech sector. Some very famous tech stocks are up over 20% over this period of time. While that might feel great now, it's important to know that you are investing in stocks that have what it takes for the long-haul. One of the easiest ways to uncover those stocks is by leaning on the time-tested performance of our Zacks Rank.
Stocks with the best Zacks Ranks, like today's Bull of the Day TTM Technologies have great earnings trends which can help investors stay profitable over the long run. TTM Technologies engages in the manufacture and sale of printed circuit boards (PCBs) worldwide. The company operates in two segments, PCB and RF&S Components.
The stock is currently ranks as a Zacks Rank #1 (Strong Buy). The reason for the favorable ranking is the series of earnings estimate revisions coming from analysts. Over the last thirty days, three analysts have increased their estimates for this year and next year. The bullish move has sent up the current year Zacks Consensus Estimate from $1.27 to $1.61 while next year's number is up from $1.45 to $1.70. The reflects earnings growth of 25.78% this year and 5.8% next year.
That's coming on revenue growth of 13.66% this year and 5.75% next year. As for valuation, the stock is only trading 10.1x earnings. That is richer than a very low industry average of 4.8x but well below the market's 18.6x.
Bear of the Day:
This market rally can make anyone feel like Warren Buffett. Stocks are pretty much moving in one direction, up. That can lull investors into a false sense of security. If there's one thing this market has taught us, it's that nothing lasts forever, the good times nor the bad.
There is a way to save yourself from the frustration of long-term losses though. That is by looking with stocks with thriving long-term profits. The Zacks Rank not only offers up ways to find those stocks with the strongest earnings trends, it also helps you avoid stocks where the trend has shifted.
One such stock with a negative shift in its earnings trend is Signet Jewelers. Signet Jewelers Limited operates as a diamond jewelry retailer. It operates primarily under the Kay Jewelers, Kay Jewelers Outlet, Jared The Galleria Of Jewelry, Jared Vault, Zales Jewelers, Zales Outlet, Diamonds Direct, James Allen, Banter by Piercing Pagoda, and Peoples Jewellers names, as well as operates online through JamesAllen.com and Rocksbox.
Currently, the stock is a Zacks Rank #5 (Strong Sell). The reason for the unfavorable rank is analysts coming in and cutting their estimates for the current year and next year. The bearish moves have slashed the current year Zacks Consensus Estimate from $12.47 down to $11.76 while next year's number is off from $12.93 to $11.17. That means that the company is expecting an earnings contraction of 4.23% this year and 5.06% next year.
The Retail – Jewelry industry ranks in the Bottom 13% of our Zacks Industry Rank. Right now, there are no stocks in the industry which are ranked higher than a Zacks Rank #3 (Hold).
Stocks to Buy Amid Growing Challenges in Retail
People are spending cautiously amid rising prices but higher demand is forcing them to make more purchases, helping the retail sector. The retail sector, which is counted among the first casualties of soaring prices, has so far put up a good show, with sales growing almost every month.
The economy is slowing but may not yet have slipped into recession as several sectors, including retail, have not yet succumbed to the inflationary pressure. In fact, they have shown steady growth amid this crisis. Given this scenario, retailers like Dollar General Corp., Dollar Tree, Inc. and Costco Wholesale Corp. are likely to do well in the near term.
Retail Sales Continue to Grow
The retail sector has put up an impressive show this year despite challenges like surging prices and supply-chain crisis. According to the latest Mastercard SpendingPulse, retail sales grew 11.2% year over year in July.
Economists have cited surging fuel and food prices as the reason for steady growth in retail sales. That, however, may not be the case as excluding automotive and fuel, retail sales rose 9% in July.
People have been negotiating their purchases amid growing prices but higher demand for consumer goods has been helping the retail sector flourish. Grocery sales jumped 16.8% year over year in July. Although higher prices played a role in this jump, demand for groceries has also increased over the year.
Other segments like apparel recorded a 16.6% jump in sales, while jewelry sales grew 18.6% year over year in July.
In-store sales have been rebounding at a fast pace after slowing for the past two years due to the pandemic. This saw online sales slowing down over the past few months. However, both in-store sales and e-commerce recorded solid growth in July.
In-store sales grew 11.1% year over year in July and 13.9% from 2019. E-commerce sales grew 11.7% year over year, its first double-digit growth since December.
Retail Sector Sustaining Solid Growth
The Fed has been aggressively raising interest rates in a bid to cool surging inflation. The U.S economy shrank 1.3% in the second quarter, recording its second consecutive quarter of decline. In technical terms, many consider it a recession.
However, the economic data and actual situation still doesn't indicate that. Although at a slower pace, factory orders for consumer durable goods and manufacturing activity are still on the rise. This indicates that there is still high demand for consumer goods, which eventually has been benefiting the retail sector.
Moreover, inflation may have finally started cooling off. The latest Consumer Price Index (CPI) numbers remained unchanged from June's reading. On a year-over-year basis, CPI for July rose 8.5% against expectations of a jump of 8.7%. Core CPI, which excludes volatile food and energy price, rose 0.3% month over month, a lot slower than June's jump of 0.7%.
Also, the U.S. economy added 528,000 jobs in July, while the unemployment rate declined to 3.5%, touching the lowest level since 1969. Average hourly wages too increased by $0.15 per hour or 0.56% to $32.27. Higher employment and wages mean people will earn more, which will give them more purchasing power.
The retail sector is still performing well, and so long as demand for goods continues to grow, sales should be on the rise. This is thus the right opportunity to invest in retail stocks that have both a strong offline and online presence and boast of a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Dollar General Corp. is one of the largest discount retailers in the United States. DG offers a wider selection of merchandise, including consumable items, seasonal items, home products and apparel. Dollar General Corporation's merchandise comprises national brands from leading manufacturers, as well as private brand selections with prices at substantial discounts to national brands.
Dollar General's expected earnings growth rate for the current year is 13.3%. The Zacks Consensus Estimate for Dollar General'scurrent-year earnings has improved 0.4% over the past 60 days. DG has a Zacks Rank #2.
Dollar Tree, Inc. is an operator of discount variety stores offering merchandise and other assortments. DLTR's stores successfully operate in major metropolitan areas, mid-sized cities and small towns. Dollar Tree offers a wide range of quality everyday general merchandise in many categories, including housewares, seasonal goods, candy and food, toys, health and beauty care, gifts, party goods, stationery, books, personal accessories, and other consumer items.
Dollar Tree's expected earnings growth rate for the current year is 40.5%. The Zacks Consensus Estimate for Dollar Tree's current-year earnings has improved 4.2% over the past 90 days. DLTR has a Zacks Rank #2.
Costco Wholesale Corp. sells high volumes of foods and general merchandise (including household products and appliances) at discounted prices through membership warehouses. COST is one of the largest warehouse club operators in the United States. Costco Wholesale Corporation also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
Costco Wholesale's expected earnings growth rate for the current year is 18.2%. The Zacks Consensus Estimate for Costco's current-year earnings has improved 0.3% over the past 60 days. COST has a Zacks Rank #2.
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Dollar General Corporation (DG) : Free Stock Analysis Report
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Signet Jewelers Limited (SIG) : Free Stock Analysis Report
TTM Technologies, Inc. (TTMI) : Free Stock Analysis Report
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