3 Stocks To Buy On A Strong Retail Sales Growth Report

The U.S. Commerce Department released June’s retail sales numbers Friday, which showed solid results for the month. Sales at retail stores and restaurants rose 0.6% in June from the prior month to a seasonally adjusted $456.98 billion. Total retail sales rose 2.7% in June from a year earlier, up from annual growth of 2.2% in May.

On the back of this retail sales data, here are 3 buy-ranked retail stocks that are having solid years thus far in 2016, and could finish the year even stronger if consumer spending continues to increase.

American Eagle Outfitters (NYSE:AEO)

American Eagle Outfitters Inc. operates as a specialty retailer offering on-trend clothing, accessories, and personal care products under the American Eagle Outfitters and Aerie brands. The company provides denim, bottoms, and other apparel, as well as footwear and accessories for men and women. The company also offers intimates, apparel and personal care products for women under its Aerie brand. AEO is currently a Zacks Rank #2 (Buy) stock, and offering a strong dividend payment of 3.13%.

The company has an A for its Value Style Score, with a low PE ratio of 12.60, a price to sales ratio of .79, and cash flow per share of 1.86. The company also has strong growth opportunities too, with current year projected sales growth of 3.32% and projected EPS growth of 16.16%, an ROE figure of 20.18%, and a net margin of 6.43%. There also has been a great deal of EPS estimate revision activity lately, with 10 analysts raising their current year EPS estimates in the last 60 days.

Wal-mart Stores Inc. (NYSE:WMT)

Wal-mart Stores Inc. is the world’s largest retailer and engages in the operation of mass merchandising stores, which serve their customers primarily in 3 segments: Wal-mart Stores, Sam’s Club Stores, and International. The company is a Zacks Rank #2 (Buy), and has several other attributes that make it a strong stock.

WMT currently has an A for both its Value and Growth Style Scores, with some impressive figures behind them. Its Value Score can be attributed to cash flow per share of 7.56, a PE ratio of 17.28, and a price to sales ratio of .47. WMT also offers a solid dividend yield of 2.71%, making it an income play. In regards to its Growth Score, it is backed up by an ROE figure of 17.58% and a sales to assets ratio of 2.43. The company is also projected to see sales growth of 1.17% this year, with revenues estimated to be around $487.78 billion.

EPS estimate revision activity has been especially positive lately for WMT too, with 11 analysts raising their current year estimates in the last 60 days. This activity has pushed the current year’s EPS estimate to $4.27, much higher than the estimate of 4.15 60 days ago. Shares of WMT are up over 20% year-to-date.

Burlington Stores Inc. (NYSE:BURL)

Burlington Stores Inc. operates as an off-price apparel and home product retailer. The company provides its customers with a selection of fashionable branded product in women’s ready-to-wear apparel, menswear, youth apparel, baby products, footwear, accessories, home goods, and coats. BURL is currently a Zacks Rank #2 (Buy), and operates in an industry ranked in the top 21% of all industries ranked by Zacks.

BURL holds a B for its Value Style Score, which can be attributed to cash flow per share of 4.59, an earnings yield of 4.19%, and a low price to sales ratio of .88. For its Growth Style Score the company holds an A, thanks to strong current year projected sales growth of 7.17%, current year projected EPS growth of 21.80%, and a net margin of 3.10%.

BURL has also seen strong positive EPS estimate revision activity lately from analysts, with 7 analysts raising their current year estimates in the last 60 days. This has helped to push the current year’s EPS estimate from 2.71 60 days ago, to the current estimate of 2.80. BURL has had a great year in 2016 thus far, as its shares are up over 57% year-to-date.

Bottom Line

If consumer spending continues to increase and the US economy continues to grow stronger, retailers across the countries stand to benefit greatly. These 3 buy-ranked retailers are all upat least 10% year-to-date, and are looking to close out the year even higher. If they are able to continue their successes and gain from increased spending, the second half of the year could be even better than the first.