Retail industry prospects are bright due to the steady demand for goods and services, as well as the expansion of digital channels. Investors may want to consider buying fundamentally strong retail stocks like Wal-Mart De Mexico, S.A.B. de C.V., BJ's Wholesale Club and Marui. Continue reading.
Retail is still growing despite the headwinds. This is due to increased internet penetration and a policy that focuses on digitalization. I believe it would be a good idea to invest in Wal-Mart, S.A.B. de C.V. (WMMVY), BJ's Wholesale Club Holdings, Inc. (BJ) and Marui Group Co., Ltd. de C.V., BJ's Wholesale Club Holdings, Inc., (BJ), or Marui Group Co., Ltd.
Retail investment is expected to be attracted in many emerging markets due to a growing middle class, increased internet penetration and a policy focused on digitalization. Online sales are expected to grow, with a projected growth rate of over 6% year-on-year, increasing their share of retail sales globally to more than 14%. This is a slight increase from the 13.9% in 2022.
Matthew Shay is the president and CEO of the NRF. He says that the retail industry experienced growth in the last three year's time period, which would have taken almost a decade before the pandemic. He added that, "While we expect the growth to moderate over the next year, it will still be positive as retail sales stabilise at more historic levels."
The smart retail market will grow by 24.4% CAGR to $82,68 billion in 2026.
Online and non-store sales are also expected to increase between 10 and 12 percent year-over-year, to an estimated $1.41 trillion and $1.43 trillion. Online shopping is still popular, but much of the growth comes from multichannel sales. The physical store plays a key role in the fulfillment process.
Check out the stocks listed above:
Wal-Mart de Mexico, S.A.B. de C.V. (WMMVY)
WMMVY, a Mexican company headquartered in Mexico City, operates and owns self-service stores throughout Mexico and Central America. The company owns discount warehouses and retail stores, hypermarkets, superstores, and self-service wholesalers.
On April 10th, WMMVY announced that it had completed the acquisition of Trafalgar Digital SA de CV Institucion de Fondos de Pago Electronico, a company which has authorization and operates as a IFPE. Walmex's financial solutions will be strengthened and millions of partners and customers will have faster access to the benefits of digital economy.
The EBIT margin for the trailing 12 months of 8.30% was 8.8% higher than 7.64%, which is the industry average. Its net income margin for the trailing 12 months of 5.90% was 84.3% greater than the industry average.
WMMVY's total revenues increased by 9.7% to MXN206.08 Billion ($11.60 Billion) during the first quarter of fiscal 2023. The net income increased by 3.7% to MXN11.52 (or $648.43 million) while the EPS grew by 3.8% to MXN0.66.
WMMVY is expected to see its EPS increase by 33.1% over the past year to $0.41 in the second fiscal quarter ending June 2023. Revenue for the same period is expected to rise 24.2% over last year to $11.87 Billion. It has also exceeded consensus revenue estimates for three of the last four quarters.
The shares of WMMVY closed the last trading session at $40.77, a 19% increase over the previous nine months.
WMMVY’s POWR ratings reflect its positive outlook. The stock is rated B overall, which in our rating system translates into a Buy. The POWR ratings are calculated using 118 factors. Each factor is weighted optimally.
Stocks have an A for Stability, and a B for Quality and Growth. It is ranked #19 in the A-rated industry of Grocery/Big Box retailers.
In addition to the above ratings, we have also given WMMVY a rating for Value, Momentum and Sentiment. All WMMVY ratings are available here.
BJ's Wholesale Club Holdings, Inc.
BJ operates warehouses clubs in the Eastern half of the United States. It offers perishables, general merchandise, gas, coupons, promotions and other services.
BJ announced on March 9, 2023 that it will be adding five new clubs to its portfolio in the United States. BJ plans to open a new club at Madison, Alabama. This will increase BJ's retail footprint from 20 states to 21.
The asset turnover ratio for the trailing 12 months of 3,21x is 262.9% greater than the industry average of 0.89x. Its trailing-12 month return on common equity is 60.68%, which is 474.3% more than the industry average of 10.57%.
BJ's revenues increased 13.1% over the previous year to $4.93billion in the first quarter of fiscal 2023, which ended on January 28. The company's net income adjusted for inflation increased by 24.4% to $136.69 millions, and its adjusted earnings per share increased by 25% to $1.
Street estimates that BJ's revenue in the first fiscal quarter ending April 2023 will increase 7.8% from last year to $4.85 Billion. The EPS for the same period is expected to be $0.85. It has also exceeded consensus revenue and EPS expectations in each of its four previous quarters.
The stock closed the last trading day at $74.95, up 18.6% in the past year.
BJ's strong prospects are reflected by its POWR ratings. The stock is rated B, which is equivalent to a Buy rating in our proprietary system.
BJ is rated B for Value. It is ranked 18th in the same industry.
Click here to view the POWR ratings for BJ.
Marui Group Co., Ltd. (MAURY)
MAURY, an investment holding company headquartered in Tokyo, Japan is engaged in retailing and FinTech business in Japan. The company is involved in the leasing and management of commercial properties, the purchase and sale of clothing and accessories, the production of space, advertising, fashion distribution and general building management.
The ratio of asset turnover for the trailing 12 months is 0.22x, which is 13.4% more than the industry average of 0.20x. Its gross profit margin for the trailing 12 months of 87.45% was 46.4% greater than the industry average of 59.75%.
MAURY's revenues increased by 3.6% over the past year to Yen162.15 Billion ($1.20 Billion) for the nine-month period ending December 31, 2022. Profit attributable owners of parent increased by 13.8% over the past year to yen18.48billion ($137m). Its EPS also increased by 20.2% to yen93.2.
Analysts expect MAURY to report a marginal increase in revenue year-over-year for its fiscal fourth quarter ending March 2023, to $411.43 millions.
The stock closed the last trading day at $40.77, a gain of 19% in the past nine-month period.
The strong fundamentals of MAURY are reflected by its POWR ratings. The stock is rated B overall, which is equivalent to a buy in our proprietary system.
MAURY has also received a B-grade for Quality, Growth Stability and Sentiment. It is ranked 17th in the same industry.
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WMMVY's shares were unchanged during premarket trading on Monday. WMMVY shares have gained 17.05% year-to-date compared to an 8.43% increase in the benchmark S&P 500 during the same time period.
Nidhi Agarwal is the author.
Nidhi's passion for the capital markets and wealth management led her to pursue an investment analyst career. She has a Bachelor's Degree in Finance and Marketing and is currently pursuing the CFA Program. Her fundamental approach to analysing stocks helps investors identify investment opportunities.