Yahoo Lifestyle BJ's Wholesale Club (BJ) Likely to Sustain Bull Run in 2022
The year 2022 might be a bit challenging one for the stock market, thanks to rising inflation, supply chain bottlenecks and the new Omicron variant that may decelerate the speed of the economic recovery at least in the first half. So, you need to be smart when it comes to investment. A right choice of stock may fetch you higher returns even amid changing market dynamics. We present you one such stock, BJ's Wholesale Club Holdings, Inc. BJ that looks well poised heading into the new year, given its sound fundamentals and growth efforts.
Amid the ultra-competitive retail environment, this Westborough, MA-based company has made multiple changes to its business model to adapt and stay relevant. Shares of this operator of warehouse clubs have climbed 72.4% so far in the year against the industry’s decline of 18.8%. There is a likelihood that BJ's Wholesale Club with a long-term earnings growth rate of 10% can attain new highs. A VGM Score of B highlights this Zacks Rank #1 (Strong Buy) stock’s upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
This Bull Run Has Momentum
BJ's Wholesale’s focus on simplifying assortments, boosting marketing and merchandising capabilities, expanding into high-demand categories as well as building own-brands portfolio bodes well. The company remains committed toward enhancing omni-channel capabilities and providing value to customers. These endeavors have been contributing to growth in membership signups and renewals, resulting in rising membership fee income, higher average members per club and decent comparable club sales growth.
While membership fee income jumped 7.7% to $91.5 million, membership grew 3% during the third quarter of fiscal 2021. Total comparable club sales rose 13.1% during the third quarter, reflecting two-year stacked comp sales of 27.2%.
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It has been directing resources toward expanding digital capabilities in order to better engage with members and provide them a convenient way to shop, including same-day delivery, curbside pick-up and buy-online, pickup-in-club (BOPIC). Management believes that digitally engaged members have higher average baskets and make more trips per year than members who shop in-club only.
The company has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and the BJ’s mobile app. This enables members to buy, review products and digitally add coupons to their membership card. The company has launched curbside pickup and expanded BOPIC service for fresh and frozen grocery items at all its locations. We note that digitally-enabled sales surged 44% during the third quarter. On a two-year stacked basis, digitally-enabled sales soared 244%.
BJ's Wholesale also holds a three-year exclusive agreement with CommerceHub, a leading e-commerce platform that allows online order fulfillment and delivery solutions. The company’s partnership with Citizens Pay for providing online financing solutions for large purchases is encouraging as well.
Wrapping Up
BJ's Wholesale is leaving no stone unturned to improve top-line performance and expand customer base, be it through better pricing, private label offerings, merchandise initiatives or digital solutions. Sturdy membership trends, assortment initiatives, enhanced digital capabilities and robust real estate pipeline are likely to help the company in sustaining stellar growth in the long term. Markedly, the Zacks Consensus Estimate for next financial year sales and earnings per share (EPS) indicates an improvement of 6.2% and 7.1%, respectively, from the year-ago period.
3 Other Stocks to Consider
Some other top-ranked stocks are Boot Barn Holdings BOOT, Tapestry TPR and Target TGT.
Boot Barn Holdings, the lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1. BOOT delivered a trailing four-quarter earnings surprise of 35.3%, on average.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 54.6% and 188%, respectively, from the year-ago period.
Tapestry, which provides luxury accessories and branded lifestyle products, flaunts a Zacks Rank #1. The company pulled off a trailing four-quarter earnings surprise of 29%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 14.8% and 17.9%, respectively, from the year-ago period. TPR has an expected EPS growth rate of 12.3% for three-five years.
Target, a general merchandise retailer, carries a Zacks Rank #2 (Buy). The company pulled off a trailing four-quarter earnings surprise of 19.7%, on average.
The Zacks Consensus Estimate for Target’s current financial year sales and EPS suggests growth of 13.9% and 40%, respectively, from the year-ago period. TGT has an expected EPS growth rate of 14.4% for three-five years.
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