The broader U.S. market averages fell sharply across the board on Friday, ending a holiday-shortened week in negative territory.
On the economic front, it was reported Tuesday that U.S. consumer confidence came in ahead of estimates for May.
The Institute for Supply Management (ISM) reported on Wednesday that U.S manufacturing activity increased in May. ISM said on Friday that the services sector declined last month.
Friday’s May jobs report was also a mixed bag. On one hand, the U.S. economy added 390,000 non-farm payrolls, which exceeded expectations. On the other hand, the headline unemployment rate remained at 3.6% and fell short of estimates.
The Week Ahead
As June marches on, just 3 members of the S&P 500 are on the earnings calendar this coming week.
In economic action, the focus will shift back toward inflation. On Friday, core consumer prices are expected to show 5.9% growth for May, excluding food and energy.
The preliminary reading of the Univ. of Michigan consumer survey is also due out Friday and includes a key inflation component.
Given a slowing growth outlook and the prospect of higher interest rates, it could become hard to come by investment gains in 2022. As a result, deciding what and when to buy can be challenging for any investor. However, the fact remains that investments with upside potential and other positive signals are out there if you dig a little deeper.
One such Retail name is worth a closer look and is our Stock of the Week.
Stock of the Week: BJ’s Wholesale (BJ)
The company is a warehouse retailer, with 225 locations primarily in the eastern U.S.
The stock gained 2% amongst the selling last week. It is showing signs that it has the potential to continue this relative outperformance into the second half of 2022. Here’s why:
Even though all consumer-facing names are facing inflationary pressure, BJ’s could have a competitive advantage by offering shoppers a value prospect to buy in bulk.
This has been apparent in the company’s operating results, as management has met or exceeded the consensus analyst profit estimate for 16 straight quarters.
The most recent occurrence came last month when the retailer earned $0.87 a share in the April quarter. Revenue increased 16% from the previous year to $4.39 billion and also topped expectations.
Same-store sales grew 14.4% in the period, aided by higher gasoline prices. In addition, membership fees grew by nearly 12% from a year ago.
At current levels, the stock is valued at 17.9x expected earnings over the next four quarters, which represents a discount to the broader market.
Wall Street agrees that BJ holds value at current levels. The average price target of 12 active analysts tracked by TipRanks is $71.93, reflecting a 20.3% upside potential.
In the meantime, the company carries an “Outperform” Smart Score of 8/10 on TipRanks. This data-driven stock score is based on 8 key market factors.
On top of the positive aspects mentioned already, the Smart Score indicates that shares have seen improving sentiment from financial bloggers.
FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio, a weekly newsletter that blends big data, and market insights.
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