3 Retail Ideas For 2019's Back-To-School Season

3 Retail Ideas For 2019's Back-To-School Season

Parents stocking up on back-to-school items might also want to pick up a few back-to-school stocks.

Bank of America Merrill Lynch on Monday had an upbeat take on three retailers where parents are likely to be looking for start-of-school buys. 

Five Below Inc FIVE

As a discount retailer with lots of Chinese merchandise, Five Below has seen its shares underperform due to tariff fears.

Analyst David Buckley said in a Monday note that the retailer's response has been to try to offset tariffs by going five and above in limited cases by offering a few products that are more than the $5 limit that gives the chain its name.

The company has said it was — even before tariffs — already testing higher-priced offerings.

The company is calling the higher-priced sections it’s testing “Just Wow” and “Ten Below.” The more expensive items are mostly in the technology and room categories.

“Even though FIVE’s strategy to take additional pricing to offset tariffs could lead to fewer units per transaction, its treasure hunt-like shopping experience will continue to offer one of the best value propositions in the marketplace,” Buckley said. 

BofA reiterated a Buy rating on Five Below with a $150 price objective. 

Children’s Place Inc PLCE

The bankruptcy of former competitor Gymboree is likely to bolster The Children’s Place stores, BofA analyst Lorraine Hutchinson said in a Monday note after BofA's back-to-school mall tour at Garden State Plaza in Paramus, New Jersey.  

The Paramus Children’s Place seemed to benefit in the first quarter from the closure of a Gymboree store next door, the analyst said.

Children’s Place said in March that it was taking the opportunity presented by the closing of Gymboree stores to open new Children’s Place stores in several locations. It also bought the rights to the Gymboree brand, which it plans to re-launch in 2020 in Children’s Place stores.

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