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Interested in gaining exposure to the recovering US consumer? We ran a screen on the retail industry to find stocks that may be poised to move higher.

We began by screening the retail industry for stocks with strong sales trends by comparing growth in revenue to growth in inventory over the last year. We screened for stocks with positive sales trends, with faster growth in revenue than inventory over the last year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign.

To screen for strengthening liquidity, we also only focused on those companies with inventory decreasing as a percent of current assets.

Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,

•Decreasing leverage, (i.e. decreasing Asset/Equity ratio)

•Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these stocks are poised to do well? Use this list as a starting point for your own analysis.

List sorted by increase in revenue over the last year.

1. Zumiez, Inc. (NASDAQ:ZUMZ): A mall-based specialty retailer providing sports-related apparel, footwear, equipment, and accessories. Market cap at $1.25B.Price at $39.99. MRQ net profit margin at 3.49% vs. 1.79% y/y. MRQ sales/assets at 0.343 vs. 0.337 y/y. MRQ assets/equity at 1.351 vs. 1.359 y/y. Revenue grew by 22.72% during the most recent quarter ($129.9M vs. $105.85M y/y). Inventory grew by 11.54% during the same time period ($70.44M vs. $63.15M y/y). Inventory, as a percentage of current assets, decreased from 29.55% to 26.7% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30).

2. American Eagle Outfitters, Inc. (NYSE:AEO): Operates as an apparel and accessories retailer in the United States and Canada. Market cap at $3.91B.Price at $20.00. MRQ net profit margin at 5.52% vs. 4.65% y/y. MRQ sales/assets at 0.375 vs. 0.333 y/y. MRQ assets/equity at 1.303 vs. 1.341 y/y. Revenue grew by 17.97% during the most recent quarter ($719.09M vs. $609.56M y/y). Inventory grew by 13.6% during the same time period ($376.69M vs. $331.59M y/y). Inventory, as a percentage of current assets, decreased from 30.09% to 29.9% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30).

3. Ross Stores Inc. (NASDAQ:ROST): Operates off-price retail apparel and home accessories stores under the Ross Dress for Less and dd's DISCOUNTS brand names in the United States. Market cap at $14.26B.Price at $62.75. MRQ net profit margin at 8.85% vs. 8.34% y/y. MRQ sales/assets at 0.682 vs. 0.669 y/y. MRQ assets/equity at 2.147 vs. 2.206 y/y. Revenue grew by 13.61% during the most recent quarter ($2,356.84M vs. $2,074.58M y/y). Inventory grew by -3.24% during the same time period ($1,134.7M vs. $1,172.72M y/y). Inventory, as a percentage of current assets, decreased from 58.72% to 55.11% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30).

4. The TJX Companies, Inc. (NYSE:TJX): Operates as an off-price apparel and home fashions retailer in the United States and internationally. Market cap at $32.02B.Price at $42.49. MRQ net profit margin at 7.23% vs. 5.09% y/y. MRQ sales/assets at 0.682 vs. 0.654 y/y. MRQ assets/equity at 2.552 vs. 2.556 y/y. Revenue grew by 11.07% during the most recent quarter ($5,798.09M vs. $5,220.3M y/y). Inventory grew by -3.48% during the same time period ($2,909.8M vs. $3,014.81M y/y). Inventory, as a percentage of current assets, decreased from 60.19% to 55.62% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30).

*Profitability data sourced from Fidelity, accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 4 Retail Stocks With Strong Profit And Sales Trends