Three Retail Stocks Showing Impressive Growth This Earnings Season

Three Retail Stocks That Are Nailing the Second QuarterIt wasn’t too long ago that NIKE, Inc. (NKE) reported another great quarter of solid growth in its business.

The company’s fiscal fourth-quarter numbers beat Wall Street consensus, and its sales from continuing operations grew 11% to $7.4 billion, or 13% on a currency-neutral basis.

In this market, double-digit growth is significant no matter if it’s in the top or bottom line.

Like the last several earnings seasons, corporations are typically only beating consensus on one financial metric (either earnings or revenues). But this is enough to keep investors buying.

Under Armour, Inc. (UA) blew the doors off of Wall Street consensus and the stock shot strongly higher.

The company reported a surge in new apparel sales. Total revenues grew a whopping 34% over the second quarter of last year to $610 million.

Breaking it down, the company’s apparel revenues grew 35% to $420 million, while footwear sales grew 34% to $110 million on new product offerings. The company experienced significant sales growth of 30% in North America, while international sales doubled (representing approximately 10% of total revenues).

Previous guidance for 2014 was for sales growth of between 24% and 25% over 2013. Management boosted this guidance to between 28% and 29%, with operating income expected to grow between 29% and 30% over last year.

This time last year, Under Armour was trading around $35.00 per share. It’s doubled since then, and the position has further momentum in this market.

It is pricey, however, with a forward price-to-earnings ratio of around 60. But the stock is likely to stay this way; the business has operational momentum, and that’s what the Street likes.

Columbia Sportswear Company (COLM) is another apparel manufacturer that just increased its guidance for the year.

Total revenues for the second quarter of 2014 grew a solid 16% to a record $324 million. Management cited improving strength in both North American and European markets, and forecasted an improving bottom half of the year, both for Columbia-branded apparel and “Sorel” footwear.

The company will split its shares two-for-one on September 26 (always a good development) and management expects 2014 total sales growth to be between 19% and 21% over last year, with gains in gross margin.

Columbia Sportswear is not as expensively priced on the stock market as Under Armour; instead, it’s similar in valuation to NIKE.

All things considered, though, in the textile/consumer goods apparel business, the numbers show a genuine improvement over last year and that’s a positive development for the broader market.

I still like NIKE on price weakness for long-term, more blue-chip portfolios. The company offers a proven track record of solid wealth creation for shareholders and strong dividend growth. (See “Growth, Income, and Quality: This Top Stock Offers It All.”)

And we’re talking about double-digit annual growth from a mature company and brand, which is an accomplishment for any enterprise, no matter what the sector.

Forward earnings estimates for NIKE have been going up across the board and management is buying back billions of dollars of its own shares.

It’s more good numbers in the consumer goods space and that is a genuinely good indicator for these stocks.