Retail

Analyst Stays Wildly Bullish on a Red-Hot Retail Sector: 4 Stocks to Buy

Kohl’s

This top retailer has been on fire and just posted solid quarterly numbers. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States that offer private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices.

While retail chains have suffered from internet pressure, Kohl’s has held its own as consumers see the company as a solid discount retailer. In addition, Amazon is growing its partnership with the department store chain. Last summer, the two companies announced that Kohl’s would begin selling Amazon devices, such as the Echo and Fire tablets, at 10 of its stores. Kohl’s also will be accepting Amazon.com returns at certain U.S. locations.

The company posted earnings and sales numbers that beat estimates on Tuesday, and it also raised forward guidance. It may have been a buy the rumor, sell the news situation as the stock was sold off. This may provide investors with a better entry point.

Kohl’s investors are paid a 3.04% dividend. The stunning $115 Jefferies price target is well above the $76.35 consensus target. The stock closed trading on Tuesday at $80.20.

Under Armour

This apparel leader has struggled mightily over the past year and may be finally turning the corner. Under Armour Inc. (NYSE: UAA) bills itself as the originator of performance footwear, apparel and equipment that has revolutionized how athletes across the world dress. Designed to make all athletes better, the brand’s innovative products are sold worldwide to athletes at all levels.

The Under Armour Connected Fitness platform powers the world’s largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal.

Jefferies remains very bullish on the company, citing the fact that it has the lowest market capitalization among the top athletic retail stocks, sales and margins are moving higher and overall better management of the business is a huge positive going forward.

Jefferies has set its price target at $29. The consensus target is a remarkably low $15.28, and the shares ended Tuesday trading at $21.65 apiece.

These four top picks from Jefferies all look like bargains compared to some of the overpriced momentum stocks. With the economy and consumer optimism rising, this group could be a great play for the rest of 2018, especially with the fourth quarter and the holiday shopping season on tap.

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