Over the years, it was assumed that ultimately brick-and-mortar retail would die and the tidal wave of online purchasing and the Godzilla strength of Amazon.com Inc. (NASDAQ: AMZN) would devour everything in its path. However, a funny thing happened on the way to the future. While Amazon’s growth and strength are undeniable, the top retail stores have continued to adapt and are holding their own, as there is one distinct quirk in apparel and footwear. You can’t try on things on the internet.
Jefferies noted this in a new report, and the firm is very positive on some of the top consumer retail stocks, especially after very solid holiday sales. The analyst said this when looking at the sector:
The consumer is strong, Amazon is not killing retail, the Fed is more dovish, oil is down, first half weather compares easy, free-cash-flow piling up, margins are moving up and consumer discretionary stocks are cheap on absolute and relative basis. Recent fundamentals suggest consumption has moderated somewhat due to stock market volume and tariff uncertainty, not a late cycle indicator. Thus, we would use the market’s late 2018 air pocket to get long consumer names for 2019.
Jefferies also noted this when talking about Amazon and the company’s retail impact:
We put a lot of effort into our MYTHBUSTERS thesis showing the Street that Amazon wasn’t taking over the world and retailers were catching up in key areas such as delivery and fulfillment which was the most important driver of our bullish group call (and we’re keeping that call for 2019).
We screened the Jefferies top picks in the consumer retail sector and found five that have been hammered but look like solid 2019 picks. All are rated Buy and also pay decent dividends, which adds