Consumer sentiments have remained resilient despite multi-decade high inflation, aggressive interest rate hikes, and recessionary fears. In the recent past, the overall retail sales, as reported by U.S. Census Bureau, grew 1.3% in October from the previous month and 8.3% year-over-year.

Although inflation continues to be a concern for both retailers and consumers, according to the National Retail Federation’s November Monthly Economic Review, the real GDP increased by 2.6% in the third quarter of 2022, showcasing healthy economic growth, setting a tone for the upcoming quarter, and reflecting robust consumer spending.

Furthermore, NRF forecasted the holiday retail sales during November and December to grow between 6% and 8% over the past year to reach between $942.60 billion and $960.40 billion, well above the 4.9% average over the past ten years.

NRF’s 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.”

Given this backdrop, we think fundamentally strong retail stocks Walmart Inc. (WMT), The TJX Companies, Inc. (TJX), Capri Holdings Limited (CPRI), and J. Jill, Inc. (JILL) look poised to deliver solid returns this holiday season.

Walmart Inc. (WMT)

WMT provides shopping alternatives in both retail outlets and through e-commerce. The business offers an assortment of merchandise and services at everyday low prices (EDLP). The company operates through three segments, Walmart U.S.; Walmart International; and Sam’s Club.

On October 28, WMT announced that The Netflix Hub, a digital storefront, would be expanding into 2,400+ Walmart locations with the introduction of a new Netflix Streaming Gift Card.  The Hub seeks to bring fans closer to their favorite series and movies with music, apparel, collectibles, games, and seasonal goods.

On October 26, WMT announced the completion of the renovations made to the retrofitted regional distribution center (RDC) in Palestine, Texas, transforming it into a high-tech automation center.

The technological investment will modernize Walmart’s extensive supply chain network by combining AI-powered software systems, robotics, and automation, which will boost distribution speed.

For the fiscal third quarter ended October 31, 2022, WMT’s total revenues increased 8.7% from the year-ago value to $152.81 billion. Adjusted operating income came in at $6.06 billion, representing an increase of 4.6% year-over-year for the same period. Its adjusted EPS increased 3.4% year-over-year to $1.50. The company’s total current assets came in at $87.68 billion, up 5.7% year-over-year.

Analysts expect revenue to increase 3.5% year-over-year to $145.17 billion for the fiscal first quarter ending April 2023. The company’s EPS for the same quarter is expected to rise 9% year-over-year to $1.42. WMT has surpassed its consensus EPS estimates in three of the four trailing quarters, which is impressive.

The stock has gained 9.8% over the past three months and 20.9% over the past six months to close the last trading session at $149.11.

The strong fundamentals of WMT are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Sentiment and a B for Stability and Quality. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #7 of 39 stocks.

Beyond what we stated above, we also have WMT’s ratings for Growth, Value, and Momentum. Get all WMT ratings here.

The TJX Companies, Inc. (TJX)

Together with its subsidiaries, TJX operates as an off-price apparel and home fashion retailer through four segments: Marmaxx; HomeGoods; TJX Canada; and TJX International.

On December 6, TJX declared a quarterly dividend on its common stock of $0.295 per share, payable on March 2, 2023.

During the fiscal 2022 third quarter ended October 29, 2022, TJX’s net sales came in at $12.17 billion. The company’s net income increased 3.9% from the prior-year quarter to $1.06 million, while its earnings per share increased 8.3% from the prior-year quarter to $0.91.

Street expects TJX’s revenue for the fiscal fourth quarter ending January 2023 to increase 1.6% year-over-year to $14.08 billion. The company’s EPS for the quarter is expected to increase by 14.2% from the previous year to $0.89. Furthermore, TJX has surpassed its EPS estimates in three of the trailing four quarters.

The stock has gained 30.1% over the past six months to close the last trading session at $79.40. Moreover, it gained 20.6% over the past three months.

TJX has an overall rating of B, which equates to a Buy in our proprietary rating system.

The stock has a B grade for Quality and Sentiment. TJX is ranked #10 among 66 stocks in the Fashion & Luxury industry.

Click here to see the additional POWR Ratings of TJX for Growth, Value, Momentum, and Stability.

Capri Holdings Limited (CPRI)

Headquartered in London, U.K., CPRI designs, markets, distributes, and retails branded women’s and men’s apparel, footwear, and accessories in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia. It operates through three segments: Versace; Jimmy Choo; and Michael Kors.

For the fiscal second quarter ended October 1, 2022, CPRI’s total revenues increased 8.6% year-over-year to $1.41 billion, while its adjusted gross profit came in at $948 million, representing an increase of 7.8% year-over-year. Adjusted net income attributable to CPRI increased 4.3% year-over-year to $245 million, while its net income per ordinary share increased 17% year-over-year to $1.79 for the same period.

The consensus revenue estimate of $1.40 billion for the fiscal first quarter ending June 2023 reflects a rise of 2.7% from the previous year. The consensus EPS estimate of $1.69 for the same quarter indicates a 12.5% year-over-year increase. CPRI has surpassed its consensus EPS and revenue in each of the four trailing quarters, which is impressive.

The stock has gained 10.2% over the past six months and 22.2% over the past month to close the last trading session at $57.45.

CPRI’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.

The stock has a B grade for Quality. Within the Fashion & Luxury industry, it is ranked #9.

To see additional ratings of CPRI for Stability, Growth, Value, Momentum, and Sentiment, click here.

J. Jill, Inc. (JILL)

JILL is an omnichannel retailer of women’s clothing, emphasizing the 45+ age segment. The business sells its goods through retail locations, a website, and catalogs. It runs an e-commerce website and 249 outlets across the country.

Claire Spofford, President and CEO of JILL, said, “As we look to the remainder of the year, we plan to continue to execute against our initiatives, including investing in our plans for long-term profitable growth while remaining prudent with our expectations related to the consumer.”

“As part of our growth strategy, we focus on modernizing the J. Jill brand to increase relevance with both new and loyal customers. We recently announced our ‘Welcome Everybody’ campaign focused on delivering an elevated shopping experience online and in stores that celebrate the totality of all women.” she added.

For the fiscal third quarter ended October 29, 2022, JILL’s net sales came in at $150.20 million, while its gross profit grew marginally from the year-ago value to $105.02 million. JILL’s adjusted income from operations for the same quarter increased by 7.3% to $20.15 million.

Furthermore, its adjusted net income increased 19% year-over-year for the fiscal third quarter ended October 29, 2022, to $10.98 million, while net income per share came in at $0.77, up 18.5% year-over-year.

Analysts expect JILL’s revenue for the fiscal year ending January 2023 to increase 4.4% year-over-year to $610.70 million. The company’s EPS for the year is expected to increase 37.1% from the previous year to $2.92. Furthermore, JILL has surpassed its EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 53% over the past three months and 14.1% intraday to close the last trading session at $27.04.

JILL’s POWR Ratings reflect its strong prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

The stock has an A grade for Quality and Sentiment and a B for Value. JILL is ranked first in the Fashion & Luxury industry.

Click here to see the additional POWR Ratings of JILL for Growth, Momentum, and Stability.

WMT shares fell $0.11 (-0.07%) in premarket trading Thursday. Year-to-date, WMT has gained 4.28%, versus a -16.26% rise in the benchmark S&P 500 index during the same period.

The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

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