The retail sector is moving higher after a round of better-than-expected results and heightened forecasts. These three stocks stand out as winners among the …
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This story originally appeared on MarketBeat
Retail gives the market what it wants
The retail sector came into focus this week with reports from most of the group. The general trend is that results are better than expected and companies are putting the third quarter and second half of the year higher. Headliners like Walmart and Target get the majority of the attention, but there are others out there who perform just as well. Today's roster consists of a group of 3 retail stocks that are well positioned for the second half of the year and are leveraging their strengths to succeed.
Macy's comeback Strong
It took Macys (NYSE: M) a few quarters to recover from its pandemic-induced slump, but it has recovered. The company's latest earnings report shows that business has returned to pre-pandemic levels, beating expectations by 1,300 basis points. The results were so strong that the company resumed its share buyback program, reinstated the dividend and led the market higher.
The guidance is really enough to get the stock moving, with the buyback and dividend being the icing on the cake. Macy & # 39; s expects sales strength to continue and is raising the forecast for the second time this year. The new forecast is for sales in the lower end of $ 23.55 billion compared to the previous range, with sales at the higher end closer to $ 22.25 billion. Regardless of this, the forecast is well above the consensus of the analysts and contributes to the positive mood in the share.
Looking ahead, we think Macy's forecast could be cautious. Among other things, the company recently signed a contract with the Toys R Us brand owner to list Toys R Us products on its website and on its shelves. This is a big step for both names and should help increase traffic for both companies. Macy's shares rose 15% on earnings news, but this is only the first leg of a much bigger move that lies ahead. The share is now breaking beyond the considerable resistance into a multi-year high, which could lead to three-digit price gains over the next two to three quarters.
Kohl's progress of 6% with a strong profit
The price action in Kohls (NYSE: KSS) is Macy & # 39; s behind but no less strong for the difference. Shares rose more than 6% on the earnings report, which shows increasing store traffic, improving profitability and accelerating trends. The company reported 30.5% year-over-year revenue growth to beat the consensus by 1000 basis points and beat the two-year comparison. What's better is that earnings per share more than doubled on both a GAAP and adjusted basis due to the combination of heavy traffic, high revenue, and a reduced discount environment. Kohl & # 39; s reintroduced its dividend three quarters ago, but at a sharply reduced rate compared to pre-Covid levels. With these results, it is on track for a significant dividend hike as soon as the next declaration is made.
Petco Health and Wellness Company is at a low point
The price action in Petco (NASDAQ: WOOF) isn't nearly as active as that of Macy's or Kohl's, but it's no less significant. The company appears to be bottoming out after a bumpy start to its life as a publicly traded company. In support of the news, Q2 results will show growth, better than expected performance and a better than expected forecast. The company had sales of $ 1.43 billion, up 18.2% year over year and beating consensus by 930 basis points. More importantly, sales are up 31% over the same period 2 years ago and growth is forecast. The company now expects full year sales and earnings in a range above the previous range and consensus estimates which are net positive and potentially cautious given pet care trends and the US.