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Defensive sectors are still outperforming the general market. However, strength among some retail groups indicates that U.S. consumer spending is still strong overall. In the U.S., the retail and consumer sectors are like the Grand Canyon. Incredibly vast. Yet companies doing well both in the field and in the stock market are often excelling in a super-specific niche. In Wednesday’s IBD, this column noted a strong rebound in the shares of Urban Outfitters ( URBN ), which reported its third quarter in a row of earnings growth. The Street expected a profit drop. The stock gapped up 16% on Tuesday and reclaimed its key 200-day moving average. Yet Urban Outfitters’ stock is still on the mend. In its apparel retail industry group, which ranked No. 25 as of Thursday’s IBD, you’ll find five stocks with a Composite Rating of 90 or higher. They include Ross Stores ( ROST ), a current member of IBD Leaderboard ; TJX Cos. ( TJX ), operator of the T.J. Maxx, Marshalls and Home Goods chains; Express ( EXPR ); and former big winner and yogawear giant Lululemon ( LULU ). Express debuted on the NYSE in May 2010. Its stores target fashion-focused young men and women via mall and urban street-corner locations. While sales in the January-ended fiscal fourth quarter rose a modest 5%, it marked the fifth straight quarter of top-line growth. Plus, Q4 same-store sales increased 4%, a good sign amid an economy that is generally seeing less traffic at the mall and more shopping online. Express’ e-commerce sales rose 8%. Q4 earnings jumped 37%, helped in part by the fact that in the year-earlier quarter earnings had dropped 14%. The company is succeeding in boosting gross merchandise margins, which helped boost overall gross margin in Q4 to 34% vs. 31.7% a year earlier. Express’ SMR Rating of C needs further improvement, but it masks a healthy ROE of 19.8% last year. The stock is trading close to its 52-week high of 20.72 and has formed a lopsided double-bottom base with a 20.01 entry. However, much of the base’s right side is in the lower half of the base, a flaw. In the tiny five-member discount and variety retail group, Five Below ( FIVE ) (98 Composite Rating) and Ollie’s Bargain Outlet ( OLLI ) (97 Composite) show excellent IBD ratings. The former has carved out a spot in the IBD 50, ranking 30th as of Thursday’s list (which is updated every day at IBD Leaderboard ). Five Below sells merchandise popular among teenagers and kids for $5 or less. It’s a concept that has worked well not only in the U.S., but also in Japan, where the 300-yen and 500-yen shops (or roughly $3 and $5) flourished in the 2000s. Philadelphia-based Five Below’s annual sales have been impressive, rising 27% to 51% each year since fiscal 2009. It’s entered new markets in the Midwest and South, including its first store in Miami, opened on March 4. Ollie’s provides a warehouse-like environment within its 203 stores across the East Coast. Its strategy to provide great finds for shoppers is working. Sales have grown on average 18% over the past seven quarters; EPS has risen 56% over the same time frame. The July 2015 IPO is up year-to-date but is struggling to surpass the 22 level. Scalper1 News
Scalper1 News