Question

invest or not invest in retail stock in the USA

Answer 1

Answer:-

The stocks which have discounts, high-end and online businesses have been working for investors where as the companies closely connected to malls and brick and mortar models for sale are not the good bets right now.

The retail giants which boast low prices are expanding their delivery services and are likely to have good sales and profits in the coming quarters.

The US job growth (payroll growth) which rebounded sharply in June which was much higher than anticipated and the best gain since January backed by the U.S. central bank's anticipated rate cut at its upcoming July 30-31 policy meet will increase the consumer spending.As job growth being one of the main drivers of the retail sales, there is likely to be more spending by the consumers increasing sales of retail companies.

In US major retailers are adapting to new consumer realities which includes new online shopping capabilities, shipping from stores directly to consumer households and closing stores at locations which are non-profitable.

The best way to evaluate a retail stock in US right now is to analyse these parameters:-

1) To see whether the company has both online and offline sales. These companies are going to benefit a long way than the ones who have either of them.
2)  To consider whether the stock is cyclical or non-cyclical. The cyclical stocks in retail like TV or refrigerators which will perform during an economic upswing.
3) The retail stocks which have beat the estimates and guidance numbers by good margins.

To conclude with one should definitely invest in those retail stocks which have more online presence and are expanding the online presence, adding new products to the cart, are having discounts, have products which are high end like luxury goods and are investing in technology and should avoid those which have more confined to malls and brick and mortar models ie who have physical presence and have low online sales.