Not all retail is the same.

There are some segments of the market that are in pretty bad shape as stores remain closed or partially open and people just aren’t in the mood to buy. Things like apparel fit this description.

Not only do people not want to try on stuff that’s already been tried out by god knows who, but clothes aren’t things you need a boatload of when the only people who are going to see you are the ones stuck with you at home. At the most, you may need some tops and jewelry (if you’re doing meetings, that is).

But there’s so much more to retail. And practically every category that has to do with any activity that can be done within the four walls is seeing huge demand. Some of these categories are such seeing such strong demand that they’re struggling with supply. So if you’re looking to invest in retail, that’s where you should head.

Then of course, some retailers have websites that you can go to and conveniently pick what you need for curbside pickup or home delivery. Retailers with these options are also doing well.  

It’s true that many retailers were impacted by store closures and are continuing to see supply chain issues. Some are getting sorted out relatively quickly. But many of the larger players continue to see some sort of issues.

Marketing dollars are being cut down drastically or switched to digital channels. Some are also cutting down on promotions.

Given this backdrop, the following companies look particularly hot-

Williams-Sonoma, Inc. (WSM - Free Report)

Williams-Sonoma, Inc. is a multi-channel specialty retailer of premium quality home products operating through five segments that constitute its brands Pottery Barn, West Elm, Williams-Sonoma, Pottery Barn Kids and Teen, and Other (international franchise operations, under the Rejuvenation and Mark and Graham brands).

As may be expected, the company’s digital-first, omnichannel approach is delivering results: e-commerce comps grew 46% in the last quarter, boosting overall performance. Spending remains focused on making the e-commerce platform more navigable, with better content and easier checkout. Marketing efforts are focused on customer relationships, all of which bode well for continued strength, whether the pandemic disappears quickly or is around for an extended period of time.

Additionally, the company is a beneficiary of the “at-home” economy, given the range of products it deals in. So although store closures were a dampener in the last quarter, and could remain something of a problem depending on the particular location of a store, demand is very high and there’s likely to be a shift to the e-commerce channel rather than lost customers.  

Other factors-

Zacks Rank #1

Value Score B

Growth Score B

Momentum Score A

Industry: Retail - Home Furnishings (top 8%)

Revenue and earnings are both expected to grow strongly this year, but revenue growth is currently expected to slow down in 2021 with earnings declining slightly.

Current year and next year earnings estimates are up 31.9% and 21.4%, respectively in the last 60 days.

Aarons, Inc. (AAN - Free Report)

Aaron’s has decided to separate into two companies by a tax-free spin-off of the company to its shareholders by year-end. The two companies are its two main segments: Progressive Leasing, which is basically a financing business, where the company services customers of traditional and e-commerce retailers of furniture, appliances, consumer electronics, accessories, etc through lease-to-own agreements; and Aaron’s Business, which comprises its own retail operations and websites dealing in branded goods within the same categories. It operates in 46 states across the U.S.

Management remains understandably conservative about fixing the company’s growth targets given persisting uncertainties. However, there are notable drivers of the business that should provide strength in the numbers.

First, the company stands to gain from the “at-home” economy that is setting up with more furniture, appliances and consumer electronics.

Second, it sells on lease-to-own basis, which brings on cash-strapped customers.

Third, stimulus packages are likely to facilitate full payment.

Fourth, management said that decision has become more conservative, which while it can impact the rate of growth will be ultimately beneficial for collections.

Fifth, with the reopening of partner stores, the Progressive business should pick up substantially.

Other factors-

Zacks Rank #1

Value Score A

Growth Score A

Momentum Score A

Industry: Retail - Consumer Electronics (top 47%)

Both revenue and earnings are expected to grow in 2020 and 2021

Current year and next year earnings estimates are up 24.9% and 15.3%, respectively in the last 60 days.

Best Buy Co., Inc. (BBY - Free Report)

Best Buy is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. The company operates in the United States, Canada and Mexico.

The biggest positive for Best Buy is its focus on tech and consumer electronics, which benefited from government-mandated restrictions and continue to benefit from the desire for social distancing, as more people work, learn, cook, exercise and entertain themselves at home.

That, and its focus on e-commerce, which saw a 240% surge in comps in the last quarter.

Management stated that the reopening of substantially all stores on Jun 22 led to a surge in demand that appears to be gathering momentum. So the following quarters should be better, especially for goods that are dependent on the in-store experience.

Best Buy recently added popular categories like digital health and fitness, at-home fitness equipment, sustainable living, outdoor activities and camping equipment that are seeing strong growth, although of course this is off a relatively small base.

And finally, enterprise demand was also rather strong, with sales growing 5.8%, despite the fact that stores were opened on an appointment-only basis for the first six weeks of the quarter.

Other factors-

Zacks Rank #1

Value Score A

Growth Score A

Momentum Score A

Industry: Retail - Consumer Electronics (top 47%)

Both revenue and earnings are expected to grow in 2020 and 2021

Current year and next year earnings estimates are up 38.0% and 17.3%, respectively in the last 60 days.

SpartanNash Company (SPTN - Free Report)

SpartanNash’s core businesses include distributing food to military commissaries and exchanges and independent and corporate-owned retail stores located in 44 states and the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. It operates supermarkets, primarily under the Family Fare Supermarkets, No Frills, Bag 'n Save and Econofoods banners.

The Food Distribution business was understandably stronger than Retail, which was impacted by store closures. However the 300%+ growth in e-commerce and 24%+ increase in private label sales ensured that Retail also reported growth. These are longer-term trends that the company should continue to benefit from.

The smaller Military Distribution business remains a weak spot because of shopping restrictions associated with COVID-19. This segment is likely to remain weak but more than offset by strength elsewhere.

Other factors-

Zacks Rank #1

Value Score A

Growth Score A

Momentum Score A

Industry: Food - Natural Foods Products (top 47%)

Revenue and earnings are both expected to grow strongly this year, but the tough comps are currently expected to lead to declines in 2021.

Current year and next year earnings estimates are up 25.4% and 16.5%, respectively in the last 60 days.