Wall Street clearly woke up on the wrong side of the bed this morning! The major indices sold off today, with the Dow leading the charge lower. Today was also a case of investors throwing the baby out with the bathwater, as fundamentally superior stocks were knocked down, too.
However, a short-term dip isn’t necessarily a bad thing. Good stocks bounce back like “fresh tennis balls,” so any dip in the market should be viewed as a good buying opportunity, especially in fundamentally superior stocks.
Personally, I’m seeing an excellent opportunity in the retail space that is a great buy on weakness. The reality is it’s looking good for the retail sector right now, and this retail stock is perfectly positioned to benefit as folks start opening their wallets again.
A recent report called Mastercard SpendingPulse found U.S. retail sales grew 23% year-over-year in April, which also marked the third-consecutive month of retail sales growth.
A lot of this retail growth has been made possible thanks to e-commerce, as consumers stay away from large crowds and buy what they need online. In fact, online sales increased 21.6% year-over-year in April. By category, e-commerce accounted for as much as 61.7% of April’s total apparel sales and 21% of department store sales.
In March, retail sales rose 9.8% from February, the largest monthly increase since May 2020, and climbed 27.7%, year-over-year. Car sales soared 15.1%, while sales at clothing stores jumped 18.3%. Retail stocks have also performed well this year, reversing the downward trend seen in many retail names in 2019 and 2020.
The industry bellweather, the SPDR S&P Retail ETF (XRT), is up over 44% so far this year, and nearly 144% over the past year. Compare that to S&P 500, which has gained about 10% year-to-date, or the Dow that’s climbed nearly 12%.
Fundamentally superior stocks in the sector have done much better.
Case in point: Big 5 Sporting Goods Corporation (BGFV). I recommended the traditional sporting goods retailer to my Growth Investor subscribers back in December.
The company had a record first quarter in terms of sales and earnings, thanks to robust demand for its products, especially winter-related products. Same store sales jumped 31.8% year-over-year.
For the first quarter, Big 5 Sporting Goods achieved total sales of $272.8 million and earnings of $21.5 million, or $0.96 per share. That’s up from sales of $217.7 million and an earnings loss in the first quarter of 2020. The consensus estimate called for earnings of $0.50 per share on $260.18 million in sales, so BGFV posted a 92% earnings surprise and a 4.9% sales surprise.
Company management commented, “Our strong sales momentum has continued into the second quarter with sales performing at historically high levels for the quarter to date.” For the second quarter, BGFV expects same store sales to rise between 22% and 27% and for earnings per share to come in between $1.05 and $1.25. That compares to a same store sales decline of 4.2% and earnings per share of $0.52 in the second quarter of 2020.
Big 5 Sporting Goods also upped its regular dividend by 20%, which brings its quarterly dividend to $0.18 per share.
BGFV has soared more than 50% on the heels of its stunning earnings report last Tuesday. Year-to-date, it’s skyrocketed over 193%. However, I think this stock is only getting started. It even holds my rare AAA-rating in Portfolio Grader, making it a “Strong Buy” right now.
So, if you’re looking for fundamentally superior stocks to invest in the retail space, BGFV is a stock to consider. Of course, I’m not just interested in retailers. My Growth Investor Buy List is chock full of high-quality stocks dominating their respective industries like Big 5 Sporting Goods Corporation. This is important, especially now that the market will grow more fundamentally focused in the coming months.
If you’re interested in my Growth Investor service, now is the perfect time to join. My Growth Investor buy lists are brimming with companies that are taking full advantage of surging consumer spending.
P.S. There’s a great divide opening up in America and investing in my Growth Investor stocks will help get you on the right side of it. On one side is a new aristocracy that’s amassing more wealth more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.
On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.
What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.
Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.
It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.
It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.
It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.
The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Big 5 Sporting Goods Corporation (BGFV)