VIDEO: 3-Mid Cap Stocks To Buy In February For Current, Future Investors
By Sean Williams, Jason Hall And Timothy Green // February 6, 2017
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(TheMotleyFool) – Sometimes the stock market’s top bargains are hiding in plain sight. Mid-cap stocks, or those with market caps between $2 billion and $10 billion, tend to be particularly attractive to growth and value investors since they usually have established and profitable business models, along with plenty of room for business development.
With this in mind, we asked three of our Foolish contributors what mid-cap stock they’d suggest investors consider buying in February. Making the list were Nordstrom (NYSE:JWN) and Best Buy (NYSE:BBY) in the retail sector, as well as offshore driller Transocean (NYSE:RIG).
A mid-cap clearance sale
Sean Williams (Nordstrom): Sometimes mid-cap stocks can offer the most intriguing opportunities for value-seeking investors. One good example would be high-end retailer Nordstrom, which has fallen 16% over the past quarter and more than 8% over the trailing-12-month period.
The big issue with Nordstrom, and retailers as a whole, is that consumers simply haven’t been spending much in recent quarters. U.S. GDP growth has been subpar through the third quarter, which may have coaxed consumers to holster their spending. Credit card interest rates are also at an all-time high, which could be playing into purchasing decisions.
While these are genuine concerns for most retailers, including Nordstrom to some extent, Nordstrom has factors that allow it to stand out from the retail pack. To begin with, the retailer’s pricing tends to attract a more affluent clientele. Well-to-do individuals and families are likely to be more resistant to economic hiccups and rising credit card interest rates than the average American, meaning Nordstrom shouldn’t be as adversely impacted by downswings in the retail industry.
Nordstrom is also building quite a loyal customer base. Aside from offering a twice-yearly sale to reward its customers, Nordstrom offers a Rewards loyalty program, which has attracted more than 7 million active customers. The move to allow members to join regardless of how they choose to pay could be a critical tactic to keeping its consumers loyal. In all, Nordstrom Rewards membership grew by more than 40% on a year-over-year basis following this decision.
Given the prudent spending patterns and strong leadership exhibited by Nordstrom’s management team, as well as the fact that the company is paying out a market-topping 3.4% dividend yield, this is the mid-cap stock I’d suggest investors give strong consideration to buying this February.
Buy this retailer before earnings
Tim Green (Best Buy): Investing in retail may seem daunting after the holiday sales reports we’ve seen so far, but consumer electronics retailer Best Buy is in a unique position. Under CEO Hubert Joly, who took the helm in late 2012 when the company was in turmoil, Best Buy has slashed unnecessary costs, made its prices more competitive, and invested heavily in e-commerce.
The result has been consistent market share gains, an accelerating e-commerce business, and rising profits.
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