Yahoo Finance 3 Must-Watch Blue-Chip Retail Stocks to Navigate September Market
September is often marked by increased market volatility, a phenomenon known as the "September Effect," which can lead to declines in equity markets due to economic factors, investor caution or profit-taking. This year, the stakes are even higher as the market closely watches the Federal Reserve’s two-day meeting starting Tuesday, where policymakers are expected to announce the first interest rate cut in more than four years.
A Fed rate cut, seen as a move to stimulate economic growth, could provide a temporary boost, but it also signals underlying concerns about the broader economy. In this context, blue-chip retail stocks, such as Walmart Inc. WMT, Costco Wholesale Corporation COST and The Home Depot, Inc. HD, offer a compelling option for those looking to weather September’s uncertainties.
Why Blue-Chip Retail Stocks Are a Safe Bet
These blue-chip giants are known for their financial strength and history of delivering reliable returns to shareholders. They tend to be less volatile than other stocks, making them dependable choices for both seasoned investors and those newer to the market. They often provide steady dividend payouts, adding an extra layer of stability.
These retailers have strong market positions, excellent brand recognition, loyal customer bases and broad market reach. These factors provide them with a competitive edge and open up new growth opportunities. As the holiday season approaches, they are expected to see increased demand, making them attractive investment options right now.
If you are looking to safeguard your investments while still finding growth opportunities, here are three blue-chip retail stocks to keep on your radar.
Past-Year Stock Price Performance of WMT, COST & HD
Image Source: Zacks Investment Research
3 Blue-Chip Retail Stocks to Watch
Walmart: Embracing Technology for Growth
Walmart has been working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.
As of Friday’s session, Walmart’s market capitalization stood at $647.9 billion. This Zacks Rank #3 (Hold) company has a trailing four-quarter earnings surprise of 6.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings per share (EPS) suggests growth of 4.7% and 9.9%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 21 cents per share (83 cents annualized). WMT’s payout ratio is 35, with a five-year dividend growth rate of 2.3%. (Check WMT’s dividend history here)
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Costco: Leveraging Membership Model for Success
Costco has been navigating the market’s ups and downs pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been this discount retailer’s primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.
Costco has a market cap of $406.1 billion. This Zacks #3 Ranked company has a trailing four-quarter earnings surprise of 2.3%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 5.1% and 10.4%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $1.16 per share ($4.64 annualized). COST’s payout ratio is 29, with a five-year dividend growth rate of 12.6%.
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Home Depot: Capitalizing on Home Improvement Trends
Headquartered in Atlanta, GA, Home Depot stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in both Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success. The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales. As mortgage rates decline, it could potentially stimulate homebuying activity and drive demand for renovation and remodeling projects.
Home Depot has a market cap of $377.4 billion. This Zacks Rank #3 company has a trailing four-quarter earnings surprise of 1.6%, on average.
The Zacks Consensus Estimate for Home Depot’s current financial-year sales calls for growth of 3.2% from the year-ago period’s reported number. The company pays out a quarterly dividend of $2.25 ($9.00 annualized) per share. HD’s payout ratio is 60, with a five-year dividend growth rate of 11.5%.
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Walmart Inc. (WMT) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
