The only good thing about a market downturn? You get plenty of opportunities to top up your stocks at a discounted entry point. And who doesn’t love a discount?
With the way the markets have fared so far this year, there are stocks in every segment that could potentially offer plenty of rewards.
CNBC’s Jim Cramer thinks there are several names in the retail industry that look particularly attractive right now, ones for which the term “beaten” easily applies. Some rallied nicely towards the end of last week, but following the severe market pullback, Cramer notes that it will be “many more days” before several names are “expensive again.”
Looking at Cramer’s picks, we’ve run through the TipRanks database three stocks that the Mad Money host says will make good additions to investors’ portfolios. This way, we can gauge whether the Wall Street panel of experts agrees with its selections. Let’s take a look at the results.
Bath and body care (BBWI)
Many stocks may be on sale right now, but the same cannot be said for household items. Prices are on the rise and macro concerns about consumer spending amid rising inflation are sending investors shivering into 2022. Shares of Bath & Body Works have suffered from this development and are down 41% on compared to the peak reached in November.
The company is the largest home fragrance and scented body care company in the United States, with more than 2,000 stores in the United States and globally, a significant online presence, and serving more than 50 million consumers. . Last August, the company changed from L Brands to its current name and spun off its Victoria’s Secret business. Now its three main revenue-generating segments – home fragrances, body care and fragrances and soaps and sanitizers – have helped the company generate revenues of $7.882 billion in 2021 (for the period ending January 31). ).
At the same time, the company posted record sales in 4Q21, posting a string of results that exceeded Street’s expectations. Revenue rose 11.4% year-over-year to $3.03 billion, narrowly beating the Street’s estimate of $2.96 billion. Non-GAAP EPS of $2.30 also beat Wall Street’s forecast – by $0.03.
However, the company’s forecast called for a modest drop in earnings for the first quarter and for the full year 2022, developments that investors did not like, while the departure of CEO Andrew Meslow for health reasons. health further clouded the outlook.
That said, BMO’s Simeon Siegel agrees with Cramer’s assessment that the stock is ripe for the picking at this time. The analyst writes: “We believe the challenging environment, a broad lack of investor appetite and the expectations of this conservative guidance have created extremely compelling long-term entry points and suggest buying recent weakness as we see both reset and long-term numbers rising. term multiple revaluation.
To that end, Siegel notes that BBWI shares outperformance (i.e. buy), supported by a price target of $83. This leaves room for year-on-year growth of around 80%. (To see Siegel’s track record, Click here)
Judging by the consensus breakdown, other analysts agree. 12 buys and 2 takes add up to a strong buy consensus rating. Moreover, the average price target of $78.93 brings the upside potential to 71%. (View BBWI Stock Predictions on TipRanks)
Bookmark Jewelers (GIS)
For Cramer’s next pick, let’s shift gears and move from perfume to jewelry. Signet is nothing less than the largest diamond jewelry retailer in the world. Operating primarily in the mid-market jewelry segment, the company also holds leading positions in the specialty jewelry market in Canada and the United Kingdom, while claiming #1 position in the US jewelry and retail jewelry market. medium-sized clock. This is a significant market worth over $90 billion, of which Signet claims a share of around 6% and aims to grow around 10% over the next few years.
Again, we are talking about a title that has lost a lot of its value recently. Shares have fallen 34% since the November high as the same worries that have plagued others have dragged the stock price down – the impact of inflation on discretionary spending and the prospect of a recession. Additionally, Signet has already stated that it will no longer purchase gemstones from Russia – the largest source of gemstones in the world.
These are things to worry about, but based on the company’s latest quarterly results and outlook, Signet appears to be doing just fine.
Non-GAAP EPS of $5.01 met Street’s targets and revenue grew 28.3% year-over-year to $2.81 billion, beating guidance by 2 .41 billion from analysts. Even more promising, in today’s challenging environment, for 1Q23 the company expects total revenue to be between $1.78 billion and $1.82 billion. The consensus had that figure at $1.74 billion.
It’s an impressive feat, says Wells Fargo’s Ike Boruchow, who also backs Cramer’s take.
“With QTD remaining very strong (during a key sell-off period, Valentine’s Day), we believe this shows that a weakening low-end consumer is not derailing the SIG bull case,” the statement said. analyst. “In fact, SIG may be the first company in our space to guide 1Q numbers to the top. With a cash war chest on the balance sheet and fundamental momentum, we consider the story one of the best in the industry today and GIS remains a ‘first choice’ for us.”
Keeping this in mind, Boruchow SIG rates as an outperformer (i.e. a buy) with a price target of $105. If this objective is achieved, a gain over twelve months of approximately 50% could be envisaged. (To see Boruchow’s track record, Click here)
Looking at the consensus breakdown, analysts are split in two when it comes to SIG. 2 buys and 2 sells add up to a moderate buy consensus rating. Moreover, the average price target of $109.25 implies an upside of around 56% from current levels. (See GIS stock predictions on TipRanks)
Smelling fragrant and sparkling, it’s time to head to the big store, at legendary American institution Macy’s. Although the company can no longer claim to own the largest store in the world, its New York flagship spot is still the largest in the United States, with a retail space of 1.25 million square feet. This store is just one of 725 department stores across the United States, which includes Macy’s, Macy’s Backstage, Market by Macy’s, Bloomingdale’s, and bluemercury brands. Macy’s also has an international presence, with licensed stores in Dubai, United Arab Emirates, and Al Zahra, Kuwait.
Department stores suffered badly during the height of the 2020 pandemic lockdown period, but staged a big comeback last year. Macy’s fortunes aligned with the overall trend, and the improvement was evident in the company’s latest quarterly financial statements for 4Q21.
Revenue rose about 28% from the same period last year to $8.67 billion, ahead of the street call of $8.45 billion. There was a nice beat on the baseline as adj. EPS of $2.45 topped the consensus estimate of $1.99.
There was more good news on the outlook. Macy’s guided 2022 revenue and EPS of $24.46 billion to $24.70 billion and $4.13 to $4.52, respectively, which at the midpoint were 2% and 7% above expectations, respectively. of Street.
So, with stocks bucking the trend and down 36% since November’s yearly high, you can see why Cramer thinks it’s time to recharge. However, Morgan Stanley’s Kimberly Greenberger begs to disagree and explains why she takes a bearish view of Macy’s prospects.
“At first glance, forecasts suggest that M’s performance could be relatively stable compared to last year’s strong consumer environment, with 2022 revenue flat at 1% year-on-year. However, the outlook for M management imply outsized revenue growth in 1Q y/y followed by a decline in revenue y/y in 2Q-4Q as the company outpaces peak consumer demand,” explained Greenberger. “The best financial performance M’s may be in the rearview mirror.As such, we remain cautious on LT’s revenue and earnings growth potential.
As a result, Greenberger assigns Macy an underweight (i.e. sell) and his $20 price target suggests the stock will fall 16% over the next few months. (To see Greenberger’s track record, Click here)
The street outlook for the M stock is a bit confusing; on the one hand, on the basis of 4 Holds and 3 Buys and Sells, each, the title is satisfied with a consensual Hold rating. However, the average objective is decidedly positive; at $31.22, the figure implies gains of 31% could be in store over the one-year period. (View Macy’s Stock Forecast on TipRanks)
To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best stocks to buya recently launched tool that brings together all information about TipRanks stocks.
Disclaimer: Opinions expressed in this article are solely those of the featured analysts. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.