While the resurgence of COVID-19 cases is a significant concern for most investors, shares of retail companies, such as Lowe's Companies (NYSE:LOW), BJ's Wholesale Club (BJ), and Macy's (NYSE:M), have been soaring in price after the companies crushed earnings estimates in their last reported quarter. Furthermore, we think it is wise to bet on these stocks now because they are expected to continue gaining even if inflation persists. Let’s discuss these names.Investors’ concerns over the pace of economic recovery due to the resurgence of COVID-19 cases have fostered market volatility. In addition, this month consumer sentiment fell to a pandemic-era low. However, due to solid second-quarter corporate earnings results, the major stock market indexes are hovering near their all-time highs. According to a FactSet research report, more S&P 500 companies than average beat EPS estimates in the second quarter. In addition, several retail companies have strengthened their digital presence, positioning them well to gain in the coming months.
Furthermore, many retailers deal with inflation by passing on higher costs to their customers through price hikes. The consumer price index increased 5.4% in July, and the International Monetary Fund (IMF) warned that inflation could be persistent. So, while investors are worried about rising inflation, retailers that are passing on higher costs to customers are not expected to be impacted substantially.
So, we think it could be wise to bet on retail stocks Lowe's Companies, Inc. (LOW), BJ's Wholesale Club Holdings, Inc. (BJ), and Macy's, Inc. (M), which have advanced significantly in price since reporting their impressive second-quarter earnings results. They are also favorably positioned to continue soaring in the coming quarters.