Investors’ concerns over the pace of economic recovery due to the resurgence of COVID-19 cases have kept the market volatile. In addition, consumer confidence slumped to a seven-month low in September. Moreover, the United States faces severe supply-chain disruption and shortages due to shipping delays, which further aggravates the already high inflationary environment. Federal Reserve Chairman Jerome Powell expressed worries over inflation and expects the current pressures running into 2022.
However, the retail sales increased 0.7% in August compared to the expectation of a 0.8% decline. Also, the upcoming holiday season is expected to drive better-than-usual sales. So, turning to retail stocks with solid momentum could be rewarding.
Retail stocks Industria de Diseño Textil, S.A. (IDEXY), Shoe Carnival, Inc. (SCVL), and Tilly’s, Inc. (TLYS) have been witnessing solid momentum over the past few months and are well-positioned to keep rallying in the upcoming months dodging the market volatility.
These three stocks have an A grade for Momentum along with an overall Strong Buy or Buy rating in our proprietary POWR Ratings system. So, it could be wise to scoop up these stocks now before they make new highs.
Industria de Diseño Textil, S.A. (IDEXY)
Based in Corunna, Spain, IDEXY engages in the retail and online distribution of clothing, footwear, accessories, and household textile products through various commercial concepts. Its retail concepts include Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, and Zara Home. In addition, it operates 6,829 stores across 96 markets; and online stores in 216 markets.
On June 1, IDEXY had agreed with Inbest SOCIMI to open Zara, Zara Home, and Stradivarius in the new shopping gallery. IDEXY’s Executive Chairman, Pablo Isla, said, “This agreement embodies our strategy succinctly: the highest quality sales space complemented by more efficient technology to enhance customer service in a building that will be a beacon of sustainability.”
IDEXY’s net sales surged 49% year-over-year to €11.94 billion ($13.84 billion) in the first half ended July 31, 2021. The company’s EBITDA grew 109% year-over-year to €3.10 billion ($3.59 billion). Its net profit came in at €1.27 billion ($1.47 billion), compared to a loss of €195 million ($225.98 million) in the first half of 2020.
IDEXY’s revenue is expected to increase 33.3% year-over-year to $10.04 billion for the quarter ending January 31, 2022. Over the past year, the stock has soared 31.9% and generated 14.6% returns year-to-date to close yesterday’s trading session at $18.38. It is currently trading 7.6% below its 52-week high of $20.20, which it hit on May 19, 2021.
It’s no surprise that IDEXY has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Momentum and Quality, and a B grade for Growth. Click here to see IDEXY’s ratings for Value, Sentiment, and Stability as well. IDEXY is ranked #25 of 63 stocks in the A-rated Fashion & Luxury industry.
Shoe Carnival, Inc. (SCVL)
SCVL operates as a family footwear retailer in the United States, offering various dresses, casual, and athletic footwear products for men, women, and children. The company operates 383 stores across 35 states and Puerto Rico. In addition, it sells its products through online shopping at shoecarnival.com and mobile applications.
On June 22, SCVL announced that its Board of Directors had authorized a two-for-one stock split of its common stock. Cliff Sifford, the company’s Vice Chairman and CEO, said, “The Board’s approval of this stock split along with the recent dividend increase further underscores its confidence in Shoe Carnival’s long-term growth trajectory.”
SCVL’s net sales surged 10.4% year-over-year to $332.23 million in the fiscal second quarter ended July 31, 2021. Its total assets grew 13.7% year-over-year to $784.06 million. Its net income came in at $44.21 million, representing a 339.5% year-over-year increase. Also, its EPS came in at $1.54, up 340% year-over-year.
SCVL’s EPS and revenue are expected to increase 701.8% and 25.8% year-over-year to $4.49 and $1.23 billion, respectively, in fiscal 2022. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. The stock has gained 93.1% over the past year and 67.2% over the past nine months to close yesterday’s trading session at $32.27. It is currently trading 24.7% below its 52-week high of $42.83, which it hit on August 25.
It’s no surprise that SCVL has an overall A rating, which equates to Strong Buy in our POWR Rating system. The stock also has an A grade for Momentum, and a B grade for Growth, Value, Quality, and Sentiment.
Click here to see SCVL’s rating for Stability as well. SCVL is ranked #4 in the same industry.
Tilly’s, Inc. (TLYS)
TLYS operates 238 stores in 33 states as a specialty retailer of casual apparel, footwear, accessories, and hard goods for young men and women and boys and girls. It also provides a third-party merchandise assortment across its various product categories. Also, it sells its merchandise through its e-commerce website, tillys.com.
On July 31, Ed Thomas, TLYS’ President and CEO, said, “Despite ongoing concerns about the current resurgence of COVID-19 cases across the country, supply chain disruptions, labor challenges, and increasing costs generally, we remain cautiously optimistic about our business prospects for the second half of fiscal 2021.”
TLYS’ net sales surged 48.7% year-over-year to $201.95 million in the fiscal second quarter ended July 31, 2021. The company’s operating income grew 242.8% year-over-year to $26.43 million, while its net income came in at $20.40 million, representing a 287.3% year-over-year increase. Also, its EPS came in at $0.66, up 266.67% year-over-year.
For fiscal 2022, analysts expect TLYS’ EPS and revenue to increase 4,325% and 41.5% year-over-year to $1.69 and $751.65 million, respectively. In addition, it surpassed Street EPS estimates in three of the trailing four quarters. The stock has gained 132.3% over the past year and 71.7% year-to-date to close yesterday’s trading session at $14.01. It is currently trading 17.2% below its 52-week high of $16.93, which it hit on August 24.
TLYS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Momentum and Sentiment, and a B grade for Growth, Value, and Quality.
Click here to see TLYS’ rating for Stability as well. TLYS is ranked #7 in the same industry.
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SCVL shares were unchanged in after-hours trading Friday. Year-to-date, SCVL has gained 69.63%, versus a 17.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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