4 Retail Stocks To Boost Sentiment With A Likely Earnings Beat

The Wall Street is juggling with various macro and micro issues at the moment that have a direct or an indirect bearing on consumer sentiment. Per the preliminary report from the University of Michigan, consumer sentiment index dipped to its lowest level in two years in January, owing to a host of reasons that raise concerns about the prospects of the economy.

Issues such as U.S.-China trade conflict, volatile crude prices, tightening of monetary policy, the partial government shutdown and slowing global economy gravely hurt the consumer sentiment that tumbled to 90.7 in January 2019 — its lowest since October 2016 — from 98.3 in December 2018. Fading of tax-cut benefit and concerns related to the moderating pace of economic growth in 2019 were other dampening factors.

Apparently, consumers’ expectations about the economy have somewhat petered out. There is a lingering fear that a fall in consumer sentiment may impact consumers’ spending pattern, which accounts for over two-thirds of the U.S. economic activity. Undoubtedly, reluctance on the part of consumers to spend more is the last thing retailers want.

A group of investors believe that these factors will weigh on markets. Nonetheless, some experts chose to look on the sunny side with a strengthening labor market and rising disposable income. An uptick in this metric is welcome news for retailers. Notably, the U.S. economy added 312,000 jobs in December. Further, October and November’s job data were revised higher.

It is hard to predict what awaits investors but with earnings season underway it would be prudent to invest in stocks that are likely trump earnings estimates. Here we have highlighted four Retail-Wholesale stocks with the combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a positive Earnings ESP. Per the latest Earnings Preview report, the sector is expected to record top and bottom-line growth of 4.7% and 18.7%, respectively, in this reporting cycle.

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