3 Small-Cap Retailers With The Potential To Soar

One of the groups with the biggest earnings beat this quarter is retailers. These stocks are benefiting from increased store traffic and strong consumer spending. Three small-cap retailers that investors should consider are Haverty Furniture (HVT), The Container Store (TCS), and Sally Beauty Holdings (SBH).

In the current market environment, investors must remain cautious and selective when picking stocks.  Though the Dow Jones and S&P 500 continue to remain strong, with both indices just a couple of percentage points away from their all-time highs, the Nasdaq and Russell 2000 have been experiencing more significant pullbacks. 

And over the last month, the percent of stocks in the S&P 500 trading above their 50-day moving average has dropped from above 90% to 72%. Similarly, the number of stocks on the New York Stock Exchange making new highs has dropped from averaging above 400 to around 100 over the last month. 

With this in mind, I believe one industry that investors should watch is the retail industry. Retail companies are benefiting from stimulus payments and the economy reopening and should continue to outperform in 2021. Further, many retailers posted strong Q1 results and issued guidance above expectations. 3 small-cap retailers that investors should consider are Haverty Furniture, The Container Store, and Sally Beauty Holdings.

Haverty Furniture

HVT is a furniture retailer with over 100 locations in 16 states. It’s one of the largest furniture companies in the South and began in 1885 with a single location in Atlanta, Georgia. The company has benefited from the pandemic as spending on home goods sharply increased. It’s also starting to invest in its online sales channel and starting to gain traction. 

HVT made some headlines earlier in the month, following a nearly 20% gain after it posted very strong Q1 results. The company had a huge beat with $1.04 in EPS, while analysts were forecasting $0.46 per share. Revenue came in at $237 million vs expectations of $206 million. This marks HVT’s 3rd earnings surprise out of the last 4 quarters.  

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