The Zacks Analyst Blog Highlights:Wells Fargo, United Parcel Service, Children's Place, Michael Kors and Best Buy

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Aug 23, 2013, 09:30 ET

CHICAGO, Aug. 23, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Wells Fargo (NYSE:WFC-Free Report), United Parcel Service (NYSE:UPS-Free Report), Children's Place (Nasdaq:PLCE-Free Report), Michael Kors (NYSE:KORS-Free Report) and Best Buy (NYSE:BBY-Free Report).

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Here are highlights from Thursday's Analyst Blog:

Three Places to Shop

One of the drivers of caution among retail management may be unease about the health of the labor market. Gallup has gotten into the business of running a poll on unemployment. The survey has recently shown a material increase in unemployment. The survey may be confirming news stories highlighting layoffs at Wells Fargo's (NYSE:WFC-Free Report) mortgage unit and news of United Parcel Service (NYSE:UPS-Free Report) eliminating healthcare benefits for spouses. The Gallup survey is based on a 30 day rolling average of responses. The survey results diverge with the recent drop in unemployment claims, but may get more attention if weakness shows up in more traditional economic indicators.

Where to shop:

With EPS estimates under pressure in the retail sector, it is probably best to look for names which have provided stable to firm guidance and are able to service a niche. Here are three suggestions:

Children's Place (Nasdaq:PLCE-Free Report). This is a Zacks Rank #2 (Buy) which reported robust profits and raised Q3 EPS guidance to $1.83 to $1.89 against a Zacks Consensus EPS Estimate of $1.79. This is a specialty retailers operating in children's apparel. The stock was reasonably priced at 15.1 times forward earnings before it bumped up earnings guidance.

Michael Kors (NYSE:KORS-Free Report), Zacks Rank #1 (Strong Buy), raised its FY 2014 EPS guidance when it released earnings in early August. The FY 2014 Zacks Consensus EPS Estimate has jumped $0.19 to $2.76 in the past 30 days. It operates in the high end or luxury retail market. Its customers are likely to be least impacted by a sudden rise in the unemployment rate. One attractive feature of KORS rests in its PEG ratio which is 0.92 against a 10 year median of 1.05. The company is priced just below its growth rate and has a combined value and rising earnings growth story.

Best Buy (NYSE:BBY-Free Report), Zacks Rank #2 (Buy), reported a 166% earnings surprise when its reported earnings for the quarter end July earlier this month. The electronics space is competitive, but the company seems to be on a turnaround path. Consensus FY 2015 EPS estimates have increased $0.06 to $2.46 over the past 30 days highlighting the improved outlook. It may provide a way to play electronics demand into the holiday period. The stock seems to have an attractive valuation at 14.4 times 12 month forward earnings per share estimates. The 10 year median is 16.5.

Concluding thoughts:

The outlook for retail will become clearer when back to school sales are finally tallied and August retail sales are released September 13^th. Weekly chain store sales suggest it is business as usual in the sector, but Gallup is warning of material weakness in the labor market not inconsistent with retail managers trying to lower the bar for exceeding profit estimates. For those investors looking to put cash to work in the retail sector, children's Place, Michael Kors, and Best Buy may provide a place to shop.

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