3 Retail Stocks to Buy Heading Into the Holidays

The stock market has remained highly volatile throughout this year due to geopolitical concerns, multi-decade high inflation, and the Fed's aggressive interest rate hikes to bring it under control. However, the retail industry has efficiently weathered these headwinds thanks to strong consumer demand and strategic partnerships.

Retail companies are poised for a surge in sales as consumers hurry to get their holiday shopping done. According to the National Retail Federation (NRF), a record 196 million Americans shopped in stores and online over the Thanksgiving holiday weekend, a 10% increase from last year.

NRF President and CEO Matthew Shay said, “In the face of the recent challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”

Investors’ interest in retail stocks can be gauged from the VanEck Vectors Retail ETF’s (RTH) 7.4% gain over the past six months.

Given this backdrop, it could be wise to invest in fundamentally strong retail stocks BJ's Wholesale Club Holdings, Inc. (BJ), Oxford Industries, Inc. (OXM), and Chico's FAS, Inc. (CHS).

BJ's Wholesale Club Holdings, Inc. (BJ)

BJ operates warehouse clubs on the east coast of the United States. It provides perishable, general merchandise, gasoline, and other ancillary services.

On October 12, 2022, BJ and Capital One Financial (COF), a leading bank and credit card company, announced their strategic program agreement for Capital One to become the exclusive issuing partner for BJ's co-brand Mastercard® program.

BJ’s Executive VP of Strategy and Development, Bill Werner, said, "Capital One's customer service and digital experience are unmatched in the card space, and we are so excited to pair this first-class offering with the power of Mastercard's network and an upgraded value proposition as we continue to deliver to our members what we believe is the best program in retail."

BJ’s total revenues for the fiscal third quarter ended October 29, 2022, increased 12.2% year-over-year to $4.79 billion. The company’s adjusted net income increased 7.9% year-over-year to $135.83 million. Its adjusted EBITDA increased 19.2% year-over-year to $272.31 million.

Additionally, its adjusted EPS came in at $0.99, representing an 8.8% increase from the prior-year period.

Analysts expect BJ’s EPS and revenue for the quarter ending January 31, 2023, to increase 7.7% and 10% year-over-year to $0.86 and $4.79 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 5.7% year-to-date to close the last trading session at $70.81.

BJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Within the A-rated Grocery/Big Box Retailers industry, it is ranked #19 out of 39 stocks. It has a B grade for Value and Sentiment.

We have also given BJ grades for Growth, Momentum, Stability, and Quality. Get all BJ ratings here.

Oxford Industries, Inc. (OXM)

OXM is an apparel company that designs, sources, markets, and distributes products of lifestyle and other brands worldwide.

For the fiscal third quarter ended October 29, 2022, OXM’s net sales increased 26.4% year-over-year to $313.03 million. The company’s gross profit increased 29.6% year-over-year to $197.69 million. Its adjusted net earnings increased 17.2% year-over-year to $23.50 million. Moreover, its adjusted EPS came in at $1.46, representing a 22.7% increase from the year-ago period.

Analysts expect OXM’s EPS and revenue for the quarter ending January 31, 2022, to increase 25.5% and 25.4% year-over-year to $2.11 and $376.15 million, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 1.8% year-to-date to close the last trading session at $103.35.

It is no surprise that OXM has an overall rating of B, translating to a Buy in our proprietary rating system. Within the Fashion & Luxury industry, it is ranked #4 out of 66 stocks. In addition, it has a B grade for Growth and Quality.

Click here to see the additional ratings of OXM for Value, Momentum, Stability, and Sentiment.

Chico's FAS, Inc. (CHS)

CHS operates as an omnichannel specialty retailer of women's private branded casual-to-dressy clothing, intimates, and complementary accessories. It operates under the Chico's, White House Black Market (WHBM), and Soma brands.

CHS’ net sales increased 14.3% year-over-year to $518.33 million for the fiscal third quarter ended October 29, 2022. The company’s net income increased 35.1% year-over-year to $24.62 million. In addition, its EPS increased 33.3% from the prior-year quarter to $0.20.

CHS’ EPS for the quarter ending April 30, 2023, is expected to increase 3.5% year-over-year to $0.30. Its revenue for the quarter ending January 31, 2023, is expected to increase 10.2% year-over-year to $547 million. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 35.2% to close the last trading session at $5.46.

CHS’ solid prospects are reflected in its POWR Ratings. The stock's overall B rating translates to a Buy in our proprietary rating system. It is ranked #3 in the same industry. It has an A grade for Value and Quality and a B for Growth.

Click here to see the additional CHS ratings for Momentum, Stability, and Sentiment.

BJ shares were trading at $70.22 per share on Tuesday afternoon, down $0.59 (-0.83%). Year-to-date, BJ has gained 4.85%, versus a -14.58% rise in the benchmark S&P 500 index during the same period.

Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.

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