While most sectors are on the last leg of the earnings season, the Retail-Wholesale sector has only seen a small handful report earnings as of yet. Investors are now focused on these upcoming reports as the sector will be in the spotlight for the next two weeks.

Per the latest Earnings Trends report about 34.2% of the S&P 500 companies in the sector have reported their results, wherein 84.6% beat earnings estimates and 76.9% surpassed revenue estimates. While earnings rose 9.4% year over year, revenues climbed 15.7%. We believe that the favorable economic indicators along with friendlier fiscal and regulatory policies from the current administration bode well for the sector.

Retail Sector Holds the Baton – Why?

The retail sector hogs all the attention with the advent of the holiday season. It is time to lift your spirits by adding potential winners to your portfolio with stocks that are likely to trump all odds and stand out with great earnings surprises. A rational investment can fetch you higher returns with the ensuing stock price appreciation.

We are entering the festive season with Thanksgiving, Black Friday, Cyber Monday and of course Christmas lined up to take you on a holiday shopping spree. Competition will certainly be tough, be it at the brick-and-mortar stores or online portals, the retailers need to be hawk-eyed.

Analysts believe that buoyant stock market, gradual wage acceleration, improving employment scenario, and a lift in the economic activity post hurricanes are enough to boost consumer sentiment. We noticed that Consumer Confidence — a key determinant of the economy’s health — reached its highest level in almost 17 years in the month of October. We expect this positive sentiment to translate into higher consumer spending that may help increase sales.

Consumer spending, which accounts for more than two-thirds of the US economic activity, surged 1% in September, recording its biggest monthly increase in almost eight years. The rise in spending was led by robust sales of autos and other durable items. All these sound favorable for retailers.