Top 5 Retail Stocks To Invest In 2014

It was a mixed day for economic data for the broad-based S&P 500 (SNPINDEX: ^GSPC  ) .

Following numerous days where we've had clearly defined reasons to head higher or lower, U.S. retail sales data gave investors a reason to smile. In April, retail sales jumped 0.1% compared to estimates that had called for a contraction of 0.3%. Counting for about 30% of U.S. consumer spending, it's always a good sign when retail sales rise during tax month.

Countering that optimism were ongoing rumors that the Federal Reserve may wind down its bond-buying program sooner than expected. We've seen this back-and-forth game of "Will they or won't they?" for some time now. But with the S&P 500 near an all-time high, the stakes are even higher now if interest rates begin to rise.

Top 5 Retail Stocks To Invest In 2014: Radioshack Corporation(RSH)

RadioShack Corporation engages in the retail sale of consumer electronic goods and services through its RadioShack store chain and kiosk operations. Its products include postpaid and prepaid wireless handsets and communication devices, such as scanners and global positioning system (GPS) products; home entertainment, wireless, music, computer, video game, and GPS accessories; media storage, power adapters, digital imaging products, and headphones; home audio and video end-products, personal computing products, residential telephones, and voice over Internet protocol products; digital cameras, digital music players, toys, satellite radios, video gaming hardware, camcorders, and general radios; general and special purpose batteries and battery chargers; and wires and cables, connectivity products, components and tools, and hobby products. The company also provides consumers access to third-party services, such as prepaid wireless airtime and extended service plans in its ser vice platform. In addition, it manufactures various products, including telephones, antennas, wires, and cable products, as well as various hard-to-find parts and accessories for consumer electronics products; and provides repair services. As of March 31, 2011, the company operated 4,467 company-operated retail stores under the RadioShack brand name in the United States; and 1,304 kiosks located in Target and Sam?s Club stores. As of December 31, 2010, it operated 211 company-operated stores under the RadioShack brand, 9 dealers, and 1 distribution center in Mexico; a network of 1,207 RadioShack dealer outlets, including 34 located outside of North America; and 4 distribution centers in the United States. Further, the company sells its products through its Website, radioshack.com. RadioShack Corporation was founded in 1899 and is based in Fort Worth, Texas.

Advisors' Opinion:

• [By David Sterman]

  Perhaps the closest catalyst is for this consumer-electronics retailer, which will commence a new sales agreement with Verizon (NYSE: VZ) on Thursday, Sept. 15. Verizon controls roughly 40% of the wireless market, so the new relationship is bound to bring a lot more foot traffic than past relationships with other carriers such as Sprint (NYSE: S) and T-Mobile.
  
  And for this type of business, foot traffic is the name of the game. RadioShack needs people to visit stores and browse for hot products. These customers may not make their intended purchase that day, but they often leave with other items such as batteries, Bluetooth headsets, GPS devices, etc. If investors take note of any uptick in RadioShack's traffic, then they may stick around long enough to notice this stock's financials are hugely appealing. Sure, growth has been anemic, but RadioShack has still managed to generate very strong free cash flow in the $165 million range during the past five years. As a result, the company's share count has fallen from 180 million in 2003 to about 120 million today. Ongoing buybacks will take this number even lower, so per-share profits are bound to rise even if overall net income stays flat.
  
  I'm guessing the Verizon deal will be a real plus for the stock, helping net income to grow at a moderate pace and earnings per share (EPS) to grow even more robustly (thanks to that shrinking share count). Analysts expect EPS to rise about 15% in 2012 to roughly $1.80, yielding a price-to-earnings (P/E) multiple below seven. On an enterprise-value basis, this stock is absurdly cheap, trading for less than four times earnings before interest, taxes, depreciation and amortization (EBITDA).

• [By Hutchinson]

  Radio Shack (RSH) is “exploring strategic alternative including a possible sale of the company,” the New York Post reports this morning. Citing “people close to the situation,” the Post says the electronics chain could be sold for over $3 billion. (Which isn’t all that stunning a figure, given the company’s $2.7 billion market cap.)

  The report says investment bankers for the company have already begun pitching private equity firms about a potential LBO of the retailer. Also possible: a merger with Best Buy (BBY), the story says. Another option: a massive stock repurchase program.

  RSH this morning is up $1.21, or 5.6%, to $23.01.

Top 5 Retail Stocks To Invest In 2014: Caseys General Stores Inc.(CASY)

Casey?s General Stores, Inc., together with its subsidiaries, operates convenience stores under the Casey?s General Store, HandiMart, and Just Diesel names in 11 Midwestern states, primarily Iowa, Missouri, and Illinois. Its stores offer foods, beverages, dairy and bakery products, sandwiches, fountain drinks, donuts, cookies, brownies, Danish rolls, ham and cheese sandwiches, pork and chicken fritters, sausage sandwiches, chicken tenders, popcorn chicken, breakfast croissants and biscuits, breakfast pizza, hash browns, quarter-pound hamburgers and cheeseburgers, and potato cheese bites. The company?s stores also provide nonfood items, which include tobacco products, health and beauty aids, school supplies, house wares, pet supplies, photo supplies, and automotive products. In addition, it offers gasoline or gasohol for sale on a self-service basis. As of July 31, 2011, the company operated 1,665 stores. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

Best Medical Companies To Own For 2014: O'Reilly Automotive Inc.(ORLY)

O?Reilly Automotive, Inc., together with its subsidiaries, engages in the retail of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The company?s stores provide new and remanufactured automotive hard parts, including alternators, starters, fuel pumps, water pumps, brake system components, batteries, belts, hoses, chassis parts, and engine parts; maintenance items comprising oil, antifreeze, fluids, filters, wiper blades, lighting, engine additives, and appearance products; and accessories, such as floor mats, seat covers, and truck accessories. Its stores also offer auto body paint and related materials, automotive tools, and professional service provider service equipment. The company?s stores sell its brand name and private label products for domestic and imported automobiles, vans, and trucks to do-it-yourself customers and professional service providers. As of March 31, 2011, it operated 3,613 stores. The company was foun ded in 1957 and is headquartered in Springfield, Missouri.

Top 5 Retail Stocks To Invest In 2014: Spectrum Brands Holdings Inc.(SPB)

Spectrum Brands Holdings, Inc., together with its subsidiaries, operates as a consumer products company worldwide. It offers consumer batteries, including alkaline and zinc carbon batteries, rechargeable batteries and chargers, and hearing aid batteries and other specialty batteries; pet supplies, such as aquatic equipment and supplies, dog and cat treats, small animal foods, clean up and training aids, health and grooming products, and beddings; and home and garden control products comprising household insect controls, insect repellents, and herbicides. The company also provides electric shaving and grooming devices; small appliances, including small kitchen appliances and home product appliances; electric personal care and styling devices; and portable lighting. Its sells its products through various trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors, and original equipment manufacturers primarily under t he Rayovac, Remington, Varta, George Foreman, Black & Decker, Toastmaster, Farberware, Tetra, Marineland, Nature?s Miracle, Dingo, 8-in-1, Littermaid, Spectracide, Cutter, Repel, Hot Shot, Black Flag, and TAT brands. The company was headquartered in Madison, Wisconsin. As of January 7, 2011, Spectrum Brands Holdings, Inc. operates as a subsidiary of Harbinger Group Inc.

Top 5 Retail Stocks To Invest In 2014: Costco Wholesale Corporation(COST)

Costco Wholesale Corporation operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. The company's product categories include candy, snack foods, tobacco, alcoholic and non-alcoholic beverages, and cleaning and institutional supplies; appliances, electronics, health and beauty aids, hardware, office supplies, garden and patio, sporting goods, toys, seasonal items, and automotive supplies; dry and institutionally packaged foods; apparel, domestics, jewelry, house wares, media, home furnishings, cameras, and small appliances; meat, bakery, deli, and produce; and gas stations, pharmacy, food court, optical, one-hour photo, hearing aid, and travel. It also provides business and gold star (individual) membership services. As of April 26, 2011, the company operated 581 warehouses, including 425 in the United States and Puerto Rico, 80 in Canada, 22 in the Uni ted Kingdom, 7 in Korea, 6 in Taiwan, 8 in Japan, 1 in Australia, and 32 in Mexico. It also has Costco Online, an electronic commerce Web site, at costco.com in the United States and at costco.ca in Canada. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.