3 Under-The-Radar Retail Stocks To Buy As Sector Surges

The retail sector has been all over the news this week, with many of the major players reporting their latest earnings results, and on Wednesday, the Commerce Department added more fuel to the fire by showing that retail sales increased 0.5% in July.

Various retailers have posted impressive results, driven by rising sales to consumers who are spending more. Walmart (WMT – Free Report) surged Thursday after its quarterly sales grew at the fastest rate in a decade, and Home Depot’s (HD – Free Report) profit and revenue topped estimates.

It is apparent that “retail apocalypse” talk is dying down, and the sector as whole is moving in the right direction. The Zacks Retail and Wholesale sector, consisting of 214 companies, has generated a 14.28% return so far this year.

With this positive trend, it is important to be aware of more retailers than the ones that have been making headlines this week. Here are 3 retail stocks that should be on your radar amid the current retail momentum:

Five Below (FIVE – Free Report)

Five Below is a value retailer that offers a wider range of merchandize to mainly teen and pre-teen customers. By only selling products, such as toys, crafts, or candy, that are $5 or under, the company has been able to differentiate itself in the crowded retail space.

Along with developing a strong niche in value retailing, Five Below has implemented a successful aggressive store growth strategy. As many other retailers are choosing to shut down stores, Five Below is on a mission to rapidly expand its storefront. The company opened 103 new stores in fiscal 2017 and plans to open 125 more this year.

Clearly, this robust strategy has been working. Shares of Five Below have been on a significant rise this year, growing by over 50% to date.

Further, Five Below beat earnings and sales expectations for the 6th straight quarter in its Q1 report. The figures not only surpassed analyst’s expectations but also management’s own guidance range. Net sales grew 27.2% from the year-ago quarter.