Despite the recessionary pressures, holiday spending remained robust. According to the Mastercard Spending Pulse, retail sales in the United States increased 7.6% year-over-year from November 1 to December 24.

In addition, the 10.6% annual growth in online sales and e-commerce, accounting for 21.6% of all retail sales (up from 20.9% in 2021), indicates that customers are becoming more accustomed to purchasing online.

Moreover, inflation coming in lower than expected for October and November boosted consumer sentiments. “Consumers and retailers navigated the season well, displaying resilience amid increasing economic pressures,” Michelle Meyer, North America Chief Economist at the Mastercard Economics Institute, said.

The global retail market is expected to grow to $38.71 trillion in 2026 at a CAGR of 10.1%, while the global retail analytics market is expected to increase at a CAGR of 17.7%, reaching $18.33 billion in 2028.

Given the backdrop, we think fundamentally sound retail stocks The Kroger Co. (KR), Casey’s General Stores, Inc. (CASY), and The Buckle, Inc. (BKE) could be ideal buys now.

The Kroger Co. (KR)

KR operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price-impact warehouses.

On December 16, KR’s healthcare division, Kroger Health, and its Family of Pharmacies announced a direct agreement with Prime Therapeutics LLC (Prime) for the former to remain in-network effective January 1, 2023. This agreement should help the company expand its capabilities in the healthcare space.

On December 12, KR announced the launch of floral and sushi delivery on the DoorDash marketplace from banner stores across the country. The new DoorDash delivery option is the latest addition to the grocer’s seamless experience, giving customers even more choices to purchase fresh, affordable products.

KR’s sales came in at $34.20 billion for the third quarter that ended November 5, 2022, up 7.3% year-over-year. The company’s total assets came in at $49.99 billion as of November 5, 2022, compared to $49.83 billion as of November 6, 2021. Its total current assets came in at $13.40 billion, compared to $13.38 billion for the same period.

Analysts expect KR’s revenue to increase 7.6% year-over-year to $148.31 billion in 2023. Its EPS is estimated to increase 12.2% year-over-year to $4.13 in 2023. It has surpassed EPS estimates in all four trailing quarters. KR’s shares have gained intraday to close the last trading session at $44.62.

KR’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. 

KR has a B grade for Value and Quality. In the A-rated Grocery/Big Box Retailers industry, it is ranked #7 out of 39 stocks. Click here for the additional POWR Ratings for Growth, Sentiment, Momentum, and Stability for KR.

Casey’s General Stores, Inc. (CASY)

CASY operates convenience stores under the Casey’s and Casey’s General Store names. It offers a selection of food, beverages, tobacco and nicotine products, health and beauty aids, automotive products, and other non-food items.

On November 1, 2022, CASY announced that it continues to expand its alternative fuel options in response to evolving guest needs and as part of its environmental stewardship efforts. In addition to offering biofuel options, the company added the 11th Tesla Supercharger at its Urbana, Illinois, location. Over the last year, the number of chargers at Casey’s locations has more than doubled, which marks a solid development.

CASY’s total revenues came in at $3.98 billion for the second quarter that ended October 31, 2022, up 21.9% year-over-year. Moreover, its net income came in at $137.56 million, up 42% year-over-year. Also, EPS came in at $3.67, up 41.7% year-over-year.

Darren Rebelez, President and CEO, said, “Thanks to our entire team, Casey’s delivered another excellent quarter by growing inside sales while driving efficiency throughout the business.”

Analysts expect CASY’s revenue to increase 19.3% year-over-year to $15.46 billion in 2023. Its EPS is expected to grow 24% year-over-year to $11.28 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past six months, the stock has gained 21.6% to close the last trading session at $226.70.

CASY’s overall A rating equates to a Strong Buy in our POWR Ratings system. It has a B for Sentiment, Value, and Quality. It is ranked #5 in the same industry.

Beyond what is stated above, we’ve also rated CASY for Growth, Stability, and Momentum. Get all CASY ratings here.

The Buckle, Inc. (BKE)

BKE operates as a casual apparel, footwear, and accessories retailer for young men and women. It markets a selection of brand-name casual apparel and private-label merchandise primarily comprising BKE, Buckle Black, Salvage, and Red by BKE, among others.

BKE’s sales, net of returns, and allowances, came in at $332.41 million for the third quarter that ended October 29, 2022, up 4% year-over-year. Its gross profit came in at $165.40 million, up 2.7% year-over-year. Its total assets came in at $505.86 million for the period ended October 29, 2022, compared to $391.21 million for the period ended January 29, 2022.

BKE’s revenue is expected to increase by 2.7% year-over-year to $1.33 billion in 2023. Its EPS is expected to grow 8% per annum for the next five years. Over the past six months, the stock has gained 59% to close the last trading session at $45.28.

BKE’s steady prospects are reflected in its POWR Ratings. BKE has an overall B rating, equating to a Buy in our rating system.

It has an A grade for Quality. It is ranked #12 out of 66 stocks in the Fashion & Luxury industry. To get BKE ratings for Growth, Value, Stability, Sentiment, and Momentum, click here.

KR shares were unchanged in premarket trading Friday. Year-to-date, KR has gained 0.53%, versus a -18.52% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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