Solid progress on the COVID-19 vaccination front has been driving increasing foot traffic at retail outlets, contributing to the industry’s comeback. As the economy continues to recover over the coming months, buoyed by rapid job growth and increased consumer spending, retail stores are expected to regain their pre-pandemic operating levels. Therefore, we think leading companies in this space, Costco Wholesale (COST), Target (TGT), Best Buy (BBY), and Ulta Beauty (NASDAQ:ULTA), should deliver market-beating returns in the coming months. So, let’s pore over these names.The fast-paced U.S. COVID-19 vaccination drive and consequent reopening of the economy has allowed the retail industry to regain the high ground, following the pandemic driven lows it experienced last year. With approximately 63% of the U.S. population having received at least one dose of COVID vaccine, brick & mortar stores have been seeing rising foot traffic over the past couple of weeks. This trend will likely continue, given the government’s efforts to vaccinate at least 70% of the population with at least one dose by July 4.
As people re-engage with shopping at physical outlets, following nearly a year of home deliveries, the retail industry is expected to grow significantly in the coming months. The world’s largest retail association, the National Retail Federation, forecasts annual retail sales to increase between 6.5%-8.2% in 2021. Annual retail industry revenues are expected to be more than $4.33 trillion in 2021, driven by rising per-capita consumer spending and strong job growth.
Thus, we think the stocks of major retailers Costco Wholesale Corporation (NASDAQ:COST), Target Corporation (NYSE:TGT), Best Buy Co., Inc. (NYSE:BBY), and Ulta Beauty, Inc. (ULTA) will outperform the broader market in the near term.