Filed Under:
Tickers in this Article: BBBY, LOW, HD, SHLD
The domestic economy still has a ways to go before it hits its stride. However, there are companies that are generating impressive earnings now, and Bed Bath & Beyond (Nasdaq:BBBY) is one of them. Today we will take a deeper dive into the New Jersey-based retailer of domestic merchandise.

IN PICTURES: 6 Major Credit Card Mistakes

Why Now?
Americans like to shop. They like to buy new things and improve their homes and lifestyles. Unfortunately, the financial crisis caused many families to cut back on spending in a major way. However, things are improving and the stock market is up markedly from the depths of the above-mentioned crisis. And so spending, particularly on things that enhance the home but aren't too pricey, like dishes, towels and basic kitchen appliances (like mixers and juicers), will increase.


Bed Bath & Beyond has been doing well on the earnings front, and in fact the company has pretty much obliterated earnings estimates over the last four quarters. As far as the first quarter is concerned, Wall Street is figuring that the company will earn 48 cents a share, and it looks like the company will beat that number by at least a few cents. The $2.67 a share estimate for this year can also be beaten. (For more on analyst expectations, be sure to read Analyst Forecasts Spell Disaster For Some Stocks.)

There are other things that make this company attractive too. For one, it has a broad reach with more than 1,000 stores and its merchandise selection is very deep, which should give it an edge over smaller competitors.

Other Stores Poised To Benefit
Lowe's (NYSE:LOW) should see increased foot traffic as the domestic economy continues on the road to recovery. The board of directors of high profile retailer of things like lumber and tools recently announced a more than 20% increase in the dividend, which sure seems bullish. The company has also beaten expectations the last two quarters, and that's hard to overlook.


Home Depot (NYSE:HD), which has a similar merchandise selection, has also been generating solid and better-than expected bottom line numbers. As contractors go back to work, the company is well-positioned to see strong foot traffic. Finally, Sears Holdings (Nasdaq:SHLD), which is frequented by many for the quality appliances and tools that it sells, could see an increase in sales too if the economy continues to improve. Although for the record, at more than 30 times this year's estimate it can't really be viewed as cheap.

The Bottom Line
Over the next several quarters, retailers that offer quality home related merchandise can fare well and Bed Bath & Beyond is near the top of my favorites list.


Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center