Now that daylight saving’s time has sprung us forward in preparation for warmer weather and longer days, winter is becoming a distant memory. The troublesome snow that caused many retail companies to suffer from a lack of sales is melting and many clothing companies are starting to see their sales increase. In the wake of spring, top analysts are eagerly giving BUY ratings to companies such as, J.C. Penney Company, Inc. (NYSE:JCP), Macy’s, Inc. (NYSE:M) and Urban Outfitters, Inc. (NASDAQ:URBN).
Belus Capital analyst Brian Sozzi recently recommended BUY J.C. Penney Company, Inc. (NYSE:JCP), following his SELL recommendation only a few weeks earlier. Even after J.C. Penney posted positive Q4 results, Brian was skeptical about the company’s turnaround. However, this past weekend Brian had a chance to do what he called, “soul-searching and store walking,” and he is ready to warm up to J.C. Penney after the cold winter. Brian noted that the “magnitude of markdowns by department has leveled off” and there is a “growing perception that the company will turn nicely profitable by holiday season this year, possibly because of stronger sales trends and 2+ years of cost cutting.” Brian has a 3.3% average return and a 57% success rate of recommended stocks.
Analyst Paul Lejuez of Wells Fargo, recently recommended BUY Macy’s, Inc. (NYSE:M), another retail company who endured a rough winter season. This past holiday season was tough on almost every retailer, but Macy’s seemed to fare better than most, “Macy’s performed very well with solid (same-store sales comparisons] up 2.3% and flat merchandise margins in a remarkably promotional season.” Because of Macy’s positive momentum from the last few months, Paul sees operating margins increasing from 9.9% to 10.3% in the 2015 fiscal year. Paul has a 4.2% average return over S&P-500 with a 65% success rate of recommended stocks.
Turning Pricing Power Into Profit
Company managements looking to achieve earnings growth often default to cost cutting, stock buyback, accounting gimmicks and other methods. But there is another way. More often than not, managements overlook pricing as a driver of earnings growth. Pricing power can be an effect way of boosting a company's bottom line. Read More
S&P Capital analyst Tuna Amobi recently recommended BUY Urban Outfitters, Inc. (NASDAQ:URBN), even though not all of its brands are pulling their own weight. Tuna chose to focus on the positive elements of Urban’s latest reports, despite a wide range of earnings from all of its brands. Tuna noted, “We think this specialty apparel retailer has some key building blocks to sustain further progress in FY 15 (Jan.), despite slightly mixed Jan-Q results that concluded an otherwise remarkable year.” Tuna also added, “We think FY15 could see some easing of lingering challenges of the namesake business, and further margin expansion could accrue from easing promotional markdowns.” Tuna has a 3.0% average return over S&P-500 and a 71% success rate of recommended stocks.
The sun is coming out and shorts are being put on, but only after they are purchased. Analysts believe that retail sales should be warming up with the changing seasons and these analysts are already recommending BUY as clothing company’s start to feel the winds of change. Feel free to head out shopping, but before you make your next financial decision, be sure to review each analyst’s past recommendation history. To learn more about these analysts, and others, download TipRanks and start making informed decisions with advice you can trust.