© Reuters. 2 Red-Hot Stock Picks for Momentum Investors
The retail industry has generated solid momentum over the past year due to its fast adaptation to pandemic-induced challenges and attendant consumer needs. We think this trend is likely to continue in the coming months, driven by strong consumer spending. Thus, Signet Jewelers (NYSE:) and Zumiez (NASDAQ:) should be able to maintain their momentum. Let’s discuss.The retail sector has been among the fastest industries to make operational changes to overcome pandemic-led challenges. Since the early days of the pandemic, many companies have brought a critical focus to their online presence and home delivery systems. And despite the rising popularity of physical shopping lately, the convenience of online shopping has allowed online retail sales to increase 39% year-over-year in the first quarter of 2021—nearly triple the increase in the 2020 first quarter.
Given rising consumer spending, several retail stocks have gained momentum of late. This is evident in the S&P Retail Select Index’s 120.2% and 50% gains over the past year and year-to-date, respectively, versus the broader S&P 500 index’s 36.6% and 16.3% returns.
Signet Jewelers Limited (SIG) and Zumiez Inc . (ZUMZ) are currently trading above their 50-day and 200-day moving averages. Given the favorable backdrop, we expect these two stocks to maintain their momentum in the near term.
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