As governments begin to ease lockdown measures, retail stocks show that consumer spending is starting to pick up.
May US retail sales data registered a 17.7% increase, bouncing back from a 16.4% drop in April, beating analysts’ projections for an 8% growth.
Now, investment bank Oppenheimer highlights its view on winning and losing retail stocks as the sector rebounds from the coronavirus store shutdowns.
“For the traditional brick-and-mortar retail industry, we would recommend avoiding them, but there is a slice of retail we are bullish on and that’s internet retail,” said Ari Wald, Oppenheimer’s head of technical analysis.
Online retailers have emerged as the clear winners from the coronavirus-induced lockdown. E-commerce giant Etsy registered growth while brick-and-mortar chain Urban Outfitters remains stuck below its breakdown at $22, having fallen nearly 40% this year.
“We can see that Etsy has broken higher, it’s forming a bullish pennant pattern above $71, we expect that breakout to resume to the upside,” Wald said Monday on CNBC’s “Trading Nation.
Many retailers have been struggling due to increased competition from Amazon and other e-commerce retailers. The pandemic has only accelerated it. However, companies who can reinvent themselves and have constant innovation in their product as well as their e-commerce platform have seen it pay off.
Both Walmart and Target are two companies that have managed to evolve to improve their online and in-store experience. As a result, their earnings estimates remained fairly stable given the global crisis. As we look to 2021 and 2022, that is where analysts expect to see a spike in their earnings estimates.