4 Stocks to Buy as Retail Sales Grow Despite Tariff Threats

U.S. retail sales slowed in April compared to the prior month. However, the sector has shown immense resilience amid price pressure and tariff threats. Retail sales grew in April, which is a positive sign for the sector and the economy.

Moreover, President Donald Trump announced a temporary pause on tariffs after the United States and China reached a trade truce last weekend. Also, the White House said that more trade deals are upcoming as negotiations with other countries are ongoing.

This is likely to benefit the retail sector in the near term. Given this situation, it would be ideal to invest in retail stocks. We have selected five, namely, Maplebear Inc. CART, PC Connection, Inc. CNXN, Carvana Co. CVNA and Nordstrom, Inc. JWN for investors.

These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

Retail Sales Continue to Grow

Retail sales grew 0.1% in April after an upwardly revised 1.7% jump in March, the Commerce Department said last week. Year over year, retail sales rose 5.2% in April. Sales at online stores grew 2% in April. Also, sales at food services and drinking places, the only services segment in the report, popped 1.2% in April.

The retail sector has had a rough ride this year as Trump’s tariffs have been weighing on consumer sentiment. Even then, the sector has managed to hold its ground and sales have been growing steadily.

The meager jump in retail sales in April was mostly due to fears of tariffs as consumers tried to save more. However, sales are likely to get a boost after the United States reached trade deals with several nations. Earlier this month, Trump announced that the United States and the U.K. had reached a trade deal.

Also, after weeks of tensions between Washington and Beijing, the United States and China decided to pause tariffs for 90 days and work out a deal. Treasury Secretary Scott Bessent said last week that more trade deals are likely in the coming days as negotiations continue with other countries.

Easing Inflation to Boost Retail Sector

U.S. consumer inflation has once again started showing signs of cooling, with food prices easing. The consumer price index (CPI) rose just 0.2% in April after declining 0.1% in March for the first time since May 2020.

Year over year, CPI rose 2.3%, the smallest gain since February 2021. The April reading indicates that inflation is gradually reaching the Federal Reserve’s 2% target. This has raised hopes that the Federal Reserve could resume rate cuts in September.

The Federal Reserve paused rate cuts this year after a 100-basis-point rate cut last year, as inflation showed signs of increasing in January. However, slowing inflation has made consumers optimistic about at least two rate cuts of 25 basis points each this year.

Lower borrowing rates bode well for the retail sector and the broader economy.

4 Retail Stocks With Growth Potential

Maplebear

Maplebear Inc. is a grocery technology company principally in North America, works with grocers and retailers to transform how people shop. CART’s Instacart Platform offers retailers a suite of enterprise-grade technology products and services to power their e-commerce experiences, fulfill orders, digitize brick-and-mortar stores, provide advertising services, and glean insights. 

Maplebear’s expected earnings growth rate for the current year is 7.6%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. CART currently carries a Zacks Rank #2.

PC Connection

PC Connection is a direct marketer of brand-name personal computers and related peripherals, software, and networking products to business, education, government, and consumer end-users located primarily in the United States.

PC Connectionhas an expected earnings growth rate of 6.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. CNXN currently carries a Zacks Rank #2.

Carvana Co.

Carvana Co. is a leading e-commerce platform for buying and selling used cars. CVNA’s end-to-end online business model, which covers every aspect of used-car retailing — including sales, financing, logistics, inspection and repair centers, as well as software development — has transformed traditional used-car sales in several ways.

Carvana’sexpected earnings growth rate for next year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 28.2% over the past 60 days. CVNA currently has a Zacks Rank #2.

Nordstrom

Nordstrom, Inc. is a leading fashion specialty retailer in the United States. JWN offers an extensive selection of both branded and private-label merchandise, which are positioned in the upscale segment of the industry. Nordstrom offers high-quality apparel, shoes, cosmetics and related accessories for men, women, young adults and children through a variety of channels.

Nordstrom’s expected earnings growth rate for the current year is 1.8%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. JWN currently has a Zacks Rank #2.

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This article originally published on Zacks Investment Research (zacks.com).

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