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5 Top-Ranked Retail Stocks to Buy Ahead of the Fall Season

·4-min read

Market pundits were concerned about a sharp slowdown in economic recovery in the third quarter. Shortage in inventory coupled with the spread of the Delta variant of COVID-19 compelled economists to slash GDP projections for the present quarter. However, sales at U.S. retailers improved surprisingly, squashing concerns about a sharp slowdown in third-quarter GDP.

The Commerce Department noted that retail sales bounced back in the month of August from July, possibly banking on the back-to-school shopping spree. In fact, sales were mostly driven by an uptick in online purchases, which easily offset the drop in sales at auto dealers. To put things into perspective, sales at U.S. retailers increased 0.7% in August from a downwardly revised July’s reading of 1.8%, citing a Reuters article. The article further stated that retail sales actually jumped 15.1% last month from the year-ago period and are now up 17.7% from the pre-pandemic levels.

Most importantly, online retail sales jumped 5.3% last month after tanking 4.6% in July, the Reuters article stated. Additionally, sales at clothing stores as well as building material and furniture stores edged up last month. However, sales at auto dealers took a beating due to the global shortage of microchips. Nonetheless, so-called core retail sales that mostly reflect the spending component of GDP, rebounded 2.5% in August from a downwardly revised drop of 1.9% in July, added the article.

What’s more, the National Retail Federation stated that the unexpected rise in retail sales last month showed the continued strength among American consumers and that they do expect a stellar 2021 for retail sales, including a strong holiday season for U.S. retailers. Moreover, Americans are no doubt sitting on excessive cash that they accumulated during the pandemic and are now willing to splurge. Needless to say, wages are also increasing, which may lead to more spending, something that bodes well for retailers in the near term.

In fact, citing a prnewswire article, per Deloitte’s annual holiday sales prediction, retail sales for the holiday season are expected to increase between 7% and 9% this year. The retail sales figure is expected to come in at $1.28-$1.3 trillion during November to January. During the holiday season, Deloitte expects e-commerce sales to jump 11-15% on a year-over-year basis to $210-$218 billion. Similarly, Mastercard SpendingPulse noted that excluding automotive and gas, sales at U.S. retailers are projected to grow 7.4%, with consumers willing to spend more online, as mentioned in a fibre2fashion article.

Thus, given the positives, retailers are set to witness a strong rally heading into the fall season. Hence, it will be prudent to invest in five of the best retail stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Abercrombie & Fitch Company ANF operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 33.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 702.7%.

Tillys, Inc. TLYS is a specialty retailer in the action sports industry selling clothing, shoes and accessories. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 29.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 4,350%.

Tapestry, Inc. TPR offers lifestyle products, which include handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 8.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 12.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

RH RH is a leading luxury retailer in the home furnishing space. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 15.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 45.3%.

Haverty Furniture Companies, Inc. HVT is a full-service home furnishings retailer. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 23.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 163.3%.


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