Retail stocks can be a good place to allocate capital during times of market volatility such as now. This is especially true when the economy is going strong, which is the case currently. The International Monetary Fund (IMF) just upgraded its forecast for U.S. economic growth this year to an annualized 2.7%, which is 0.6 percentage points higher than it predicted in January of this year. The IMF went so far as to refer to the American economy as “overheated.”
“The strong recent performance of the United States reflects robust productivity and employment growth, but also strong demand in an economy that remains overheated,” wrote the financial agency of the United Nations (U.N.) in its latest global economic outlook. At the same time, U.S. retail sales in March grew more than expected, rising 0.7%. Retail sales in February were revised higher to 0.9%, the biggest monthly gain in more than a year. Here are the top three retail stocks to buy in April 2024.
Nordstrom (JWN)
Investors looking to make a quick buck, might want to consider department store chain Nordstrom (NYSE:JWN). The family and namesake behind the department stores is considering taking the company private. According to media reports, the Nordstrom family has formed a special committee to evaluate privatization bids. The move comes as the 123-year-old company struggles with a decline in sales as shopping increasingly moves online. JWN stock is down 55% in the last five years.
The special committee is apparently comprised of independent and disinterested directors who will evaluate proposals from interested parties aimed at taking it private. The current board of directors has warned that there’s no guarantee a deal will happen in coming months, and Nordstrom has been down this road before. In 2017, private-equity firm Leonard Green & Partners came close to taking Nordstrom private but the deal fell through. Still, if a deal does materialize, it could give a boost to the share price.
American Express (AXP)
American Express (NYSE:AXP) just saw its stock jump 6% higher in a day after the credit card giant reported a first quarter profit that beat Wall Street expectations. The company is benefitting as its cardholders, who tend to be wealthy, continue to spend generously at restaurants, shopping malls, and on travel, i.e. hotels and airline tickets. The continued spending led American Express to report Q1 earnings per share (EPS) of $3.33 compared to $2.95 that was anticipated by analysts. Profits rose 34% from a year earlier.
Revenue in Q1 totaled $15.8 billion, which matched forecasts. However, sales were up 11% from a year earlier. American Express said that cardholder spending increased 7% from a year ago during the period. In terms of guidance, American Express maintained its previous revenue growth forecast of 9% to 11% and a profit estimate of $12.65 to $13.15 per share. American Express said it expects to continue benefitting from a resilient economy. AXP stock is now up 42% in the last 12 months, including a 2024 gain of 23%.
Procter & Gamble (PG)
Consumer goods company Procter & Gamble (NYSE:PG) also had a strong print. The company behind products such as Tide laundry detergent, Gillette razor blades and Pampers diapers reported EPS of $1.52 versus $1.41 that was estimated by analysts. Management said that sales of its products, which are mostly found in grocery stores, remain strong in North America and that it is seeing improvement in China, an important market for the company.
Revenue in what was the company’s fiscal Q3 came in at $20.2 billion, which was slightly below forecasts of $20.41 billion. Overall sales were up 1% from a year earlier. Despite the miss on its Q1 sales, Procter & Gamble did revise up its forward guidance. The company now expects its core earnings to rise between 10% and 11% in fiscal 2024, compared with its previous forecast of 8% to 9% profit growth. The guidance was enough to send PG stock up about 1% after the Q1 print. Year to date, the company’s share price is up 6%.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.