For immediate release
Chicago, IL – March 22, 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: Builders FirstSource BLDR, Carter’s Inc. CRI and Target TGT.
Here are the highlights from Monday’s analyst blog:
Capitalize on market trends with these 3 retail stocks
On the heels of last Wednesday’s meeting with the Fed, the major indices posted their best weekly performances since last November and provided investors with a well-deserved recovery.
Investors are hoping that the recovery will last and that the market can continue its ascent as the outlook for economic growth strengthens. COVID-19 appears to be receding, there is a ton of pent up economic demand, and the Fed’s plans have become clearer. With a more robust economic outlook, I think retail names should benefit.
To capitalize on the strength of the market, it is essential to look to names that have a strong Zacks rank combined with a high VGM score. Let’s take a look at three retail stocks that meet these criteria and analyze why they would make good additions to your portfolio in a recovering market.
Builders FirstSource is a leading supplier and manufacturer of structural building products. The company’s stock has been particularly strong over the past year, rising 60% in value and easily outpacing the S&P 500’s 15% return. just as strong, down 11% and lagging the broader market.
BLDR’s future growth prospects are impressive due to its high number (16) of estimate upgrades over the past 60 days. Estimates for the current quarter were up nearly 85% to $2.08 per share, and for the following quarter, estimates were up 60% to $2.54 per share. Additionally, the consensus estimate trend was up 30% to $8.91 per share for the current year, and for the following year it was up 33% to $9.23 per share.
BLDR’s earnings reports have been the definition of consistency, stringing together 14 consecutive EPS beats dating back to August 2018. The average EPS surprise over the past four quarters is nearly 75%, and in its most recent quarter, the company exceeded expectations by 47%. %, or $0.89.
BLDR is bullish on a noticeable improvement in its financial performance, expecting net sales in the range of $19.3 billion to $19.8 billion from the previously expected $18 to $19 billion. The company’s 8.8X forward earnings multiple is also well below the Zacks Building Products – Retail Industry average of 16.3X.
The consensus estimate trend for BLDR has been rising rapidly, earnings reports have consistently exceeded expectations, and the company’s forward earnings multiple is well below the industry average. Additionally, its #1 Zacks ranking (Strong Buy) and VGM score of an A reinforce my belief that BLDR would be a great addition to your portfolio in a rebounding market.
Builders FirstSource, Inc. price-consensus-eps-surprise-chart | Builders FirstSource, Inc. Quote
Carter’s is North America’s largest distributor of branded apparel and related products for babies and toddlers. Shares of the company have lagged the general market over the past year, rising nearly 10% in value. Year-to-date, stocks have provided a slightly better defense than the S&P 500, down 5% in value.
Of ten revisions to analyst estimates over the past 60 days, eight have been upwards. The next quarter saw two downgrades, causing the consensus estimate to trend down 22% to $1.33 per share, and the trend for the next quarter up 20% to $1.89 per share. Additionally, the trend rose 10% to $8.93 per share for the current year and 12% to $9.71 per share for next year.
Carter’s has beaten EPS estimates in each of its last four quarterly reports, delivering an average EPS surprise of nearly 200%. Two of the previous four quarterly reports posted triple-digit surprises, and its latest quarter beat expectations by 13%, reporting EPS of $2.31.
Management issued an optimistic outlook for 2022 due to strong demand, improved price realization and inventory management, a robust holiday season and the company’s focus on streamlining its e-commerce capabilities through its rapidly growing mobile app. Additionally, CRI’s forward earnings multiple of 10.8X is well below the industry average of 14.4X.
With the consensus estimate trending up for the full year, the remarkable beats in EPS and an optimistic view for 2022, CRI has instilled confidence around its future performance. Combined with its Zacks #1 ranking and VGM score of an A, I think Carter’s would be a great addition to your portfolio.
Target offers a range of products from household essentials and electronics to toys and clothing for men, women and children. Target stocks have shown strength over the past year, rising nearly 21% in value and slightly outperforming the S&P 500. Year-to-date, stocks have remained stronger than the broader market, in down 3.5%.
Thirty estimate revisions (28 up, two down) have occurred over the past 60 days. For the next and next quarter, the consensus estimate trend was up 5% to $3.06 per share and 8.7% to $3.98 per share. Current and next year EPS estimates were quickly revised, rising 9.3% to $14.47 per share and 8.7% to $15.76 per share.
In pure consistency and strength, Target has exceeded EPS expectations for 12 straight quarters since May 2019. Over the past four quarters, the average EPS surprise for the retailer has been 21%, with its latest quarter beating expectations. expectations of nearly 12% or $0.33.
TGT’s recent initiatives, such as expanding its omnichannel capabilities, creating more flexible store sizes and overall financial strength, are key drivers for future growth. Additionally, Target’s forward earnings multiple of 15.6X is well below the industry average of 22.6X.
An overwhelming amount of upward revisions to estimates, a growing bottom line, strong relative performance, and a focus on building the company’s omnichannel capabilities are all reasons why I think Target would be a great addition to your wallet. Target is a Zacks rank #1 and has an overall VGM score of B.
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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. To visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.