The retail sector made a strong comeback last year after being hit by the COVID-19 induced lockdown. The pandemic forced the retail industry to adapt to a new normal by offering digital platforms and enhanced in-store experiences. U.S. holiday retail sales have grown 14.1% year-over-year to a record $886.70 billion, 19.2% above the pre-pandemic level.
And although the COVID-19 omicron variant spread and inflation caused retail sales to decline slightly in December, the gradual economic recovery should allow retail sales to rebound in the near term.
Given this backdrop, Wall Street analysts expect retail stocks, The RealReal, Inc. (REAL), Hibbett, Inc. (HIBB), and Party City Holdco Inc. (PRTY), to rally more than 90% in price in the coming months.
The RealReal, Inc. (REAL)
San Francisco's REAL is an online marketplace for authenticated and consigned luxury goods. The company offers luxury products across categories, including women’s, men’s, kids’, watches, jewelry, home, and art products. REAL offers primarily pre-owned luxury products on its online marketplace and operates retail stores in various parts of California, New York, and more.
Last November, REAL released ReCollection 02, its first project from its new Circular ReSource Lab, to give damaged luxury goods new life and bring them back into circulation. The company’s ReCollection 02 features more than 60 upcycled women’s ready-to-wear pieces and accessories, with prices ranging from $200 to $680. The upscaling program is expected to promote sustainability and increase the company’s profit margins.
In its fiscal 2021 third quarter, ended September 30, REAL’s total revenue increased 52.8% year-over-year to $118.84 million. Its gross margin grew 43.6% year-over-year to $71.10 million. The company’s cash and cash equivalents increased 26.8% over the nine months ended Sept. 30, 2021, to $444.81 million. REAL’s total assets grew 27.5% over the nine months to $771.41 million.
The $134.98 million consensus revenue estimate for its fiscal fourth quarter, ended December 31, 2021, represents 59.6% year-over-year growth from the same period in 2020. The Street expects REAL’s EPS to improve 20.2% year-over-year in the about-to-be-reported quarter.
Over the past five days, REAL’s shares have gained 15.6% in price. Among the 10 Wall Street analysts that rated REAL, seven rated it Buy, while three rated it Hold. The 12-month median price target of $18.50 indicates a 94.7% potential upside from yesterday’s $9.50 closing price. The price targets range from a low of $9.00 to a high of $25.00.
Hibbett, Inc. (HIBB)
HIBB in Birmingham, Ala., retails athletic specialty products in small- and mid-sized communities in the U.S. The company’s product portfolio includes athletic and fashion apparel, athletic footwear, and team sports equipment. It operates more than 1080 stores located in 35 states.
HIBB announced plans to reopen Hibbert stores in either Alabama or Georgia on January 10, following the College Football National Championship Game. The HIBB stores were reopened to allow immediate access to championship gear to the loyal fans. This is expected to increase the company’s customer reach and boost revenues.
HIBB’s net sales increased 15.2% year-over-year to $381.72 million in its fiscal third quarter 2021, ended Oct. 30, 2021. HIBB’s gross margin increased 9.2% year-over-year to $138.70 million in its third fiscal quarter. HIBB’s earnings per share grew 14.3% year-over-year to come in at $1.68.
Analysts expect HIBB’s revenue for its fiscal fourth quarter, ended January 31, 2022, to come in at $407.48 million, representing an 8.1% rise year-over-year. The Street expects HIBB’s EPS to improve 41.1% year-over-year in the about-to-be-reported quarter to $1.98. Also, the company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has increased 1.4% intraday to close yesterday’s trading session at $58.48.
Of the three Wall Street analysts that rated HIBB, two rated it Buy, while one rated it Hold. The 12-month median price target of $116.00 indicates a 98.4% potential upside. The price targets range from a low of $88.00 to a high of $160.00.
Party City Holdco Inc. (PRTY)
Elmsford, N.Y.-based PRTY designs, manufactures, and markets party goods worldwide through its subsidiaries. The company operates in two segments: Retail; and Wholesale. PRTY operates in more than 830 specialty retail party supply stores. It offers its products through company-owned stores, independent party supply stores, mass merchants, e-commerce merchandisers, and more.
Last month, PRTY partnered with Main Event, a leading family entertainment brand, to offer five new customizable party packs curated by an expert team of celebration specialists for birthday celebrations. This one-of-its-kind partnership might increase PRTY’s customer base because it caters to almost everyone from kids to teens and boosts its revenue streams.
In its fiscal third quarter, ended Sept. 30, 2021, PRTY’s gross profit increased 3.3% year-over-year to $183.70 million. PRTY’s income from operations increased 174% year-over-year to $20.05 million. And the company’s total assets grew 1.1% over nine months to $2.84 billion.
The $697.3 million consensus revenue estimate for its fiscal fourth quarter, ended Dec. 31, 2021, represents 7.6% year-over-year growth. The $0.41 consensus EPS estimate for its fiscal fourth quarter indicates 39.7% year-over-year growth.
Over the past five days, the stock has increased 7.7% in price to close yesterday’s trading session at $4.49. The 12-month price target of $9.00 indicates a 100.5% potential upside.
REAL shares were trading at $9.81 per share on Wednesday morning, up $0.31 (+3.26%). Year-to-date, REAL has declined -15.50%, versus a -3.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
3 Retail Stocks That Wall Street Predicts Will Rally By 90% or More StockNews.com
