Stocks to Watch: The 10 Fastest-Growing U.S. Retailers

Despite an overall slump in retail sales this year, some thriving retail stocks to watch have popped up - companies that are growing sales, many in the double digits.

These retailers have done a better job of adapting to both the shift toward more online shopping as well as the aftermath of a recession that has left many Americans with less money to spend. 

The proof is in the numbers. While overall U.S. retail sales rose about 4.2% in 2013, the fastest-growing retailers had sales increases of more than twice that.

What we're seeing is a massive shift in the retailing landscape as more conventional stores such as Macy's Inc. (NYSE: M), Target Corp. (NYSE: TGT), and Wal-Mart Stores Inc. (NYSE: WMT) have all missed on earnings in recent months.

The following list of 10 retail stocks to watch had the largest percentage gains in U.S. retail sales between 2012 and 2013, according to STORES' Top 100 Retailers report.

Retail Stocks to Watch: America's Fastest-Growing Retailers

Retail Stocks to Watch No. 10: Starbucks Corp. (Nasdaq: SBUX)
One-year retail sales growth: 9.4%
Total 2013 U.S. sales: $9.6 billion
As big as Starbucks has become, the ubiquitous coffeehouse showed last year it can still manage serious growth. In addition to opening 400 new stores (it has over 11,000 in the United States alone), SBUX used its acquisitions of La Boulange (bakery goods), Evolution Fresh (juices), and Teavana (tea beverages) to add new products. Starbucks could easily make this list again next year. SBUX closed at $77.48 Tuesday.

Retail Stocks to Watch No. 9: Signet Jewelers Ltd. (NYSE: SIG)
One-year retail sales growth: 9.5%
Total 2013 U.S. sales: $3.6 billion
Signet likes to grow by acquisition, as it has gobbled up Kay Jewelers, Jared, Earnest Jones, H. Samuel, and, earlier this year, Zales. Signet also increased its number of U.S. stores in 2013 by 10.4% to 1,471. The stock is up 15.6% over the past month. SIG closed at $117.54.

The remainder of these stocks to watch all had sales increases of more than 10%...

Retail Stocks to Watch No. 8: AT&T Wireless (NYSE: T)
One-year retail sales growth: 10.2%
Total 2013 U.S. sales: $8.3 billion
While AT&T's retail operations are just a small part of company revenue, the segment is doing very well with a 10.2% rise from the previous year. AT&T stock is up about 8% from its lows of the year, which it hit in early March. The shares closed at $34.84.

Retail Stocks to Watch No. 7: Whole Foods Market Inc. (Nasdaq: WFM)
One-year retail sales growth: 10.3%
Total 2013 U.S. sales: $12.5 billion
Whole Foods was one of the first companies to focus on organic foods, and the growing interest in healthier diets has helped the company thrive despite rising competition. Whole Foods increased its U.S. store count to 247 last year on its way to a goal of 1,000, which will help it maintain its sales growth numbers. Although revenue growth has stuck close to 10% this year, margins have fallen, knocking the stock down about 33%. WFM closed at $39.09.

Retail Stocks to Watch No. 6: Tractor Supply Co. (Nasdaq: TSCO)
One-year retail sales growth: 10.7%
Total 2013 U.S. sales: $5.1 billion
Tractor Supply had 1,276 retail farm and ranch stores in the United States as of 2013, which was an increase of about 9% from the stores it had the year before. In addition to the new stores, Tractor Supply also started selling more perishable items last year, such as vegetables, herbs, and fruit trees. Online retailers have had little impact on TSCO, as many of the company's products are difficult to ship. TSCO closed at $67.16.

Retail Stocks to Watch No. 5: Apple Inc. (Nasdaq: AAPL)
One-year retail sales growth: 11%
Total 2013 U.S. sales: $26.6 billion
The rocky ride for Apple stock last year had little connection to its steady U.S. retail sales, which rose 11% last year. Apple's retail stores have proven astonishingly successful, and sell more per square foot - $4,551 - than any other retailer. (Tiffany & Co. (NYSE: TIF) is third at $3,043 per square foot.) Apple's iPhone 6, due to be unveiled Sept. 9, will probably push the tech giant's retail sales growth even higher in 2014. AAPL closed at $103.30.

Retail Stocks to Watch No. 4: Family Dollar Stores Inc. (Nasdaq: FDO)
One-year retail sales growth: 11.4%
Total 2013 U.S. sales: $10.4 billion
The poor economy has been good to Family Dollar, which has gained customers seeking the lowest possible prices. To accommodate such demand, FDO added 1,000 new items, many of them groceries. It also added 506 new stores to bring its total to 7,916. Although it has agreed to sell itself to Dollar Tree Inc. (Nasdaq: DLTR) for $8.5 billion, Dollar General Corp. (NYSE: DG) keeps making new offers. FDO is up 36.8% over the past three months as a result. FDO closed at $80.22.

Retail Stocks to Watch No. 3: Chick-fil-A (Privately held)
One-year retail sales growth: 12.4%
Total 2013 U.S. sales: $5.2 billion
Because Chick-fil-A is concentrated mostly in the South, it has plenty of room to grow in other regions. And it does have big plans to do exactly that, which could encourage management to take the company public in an IPO within the next few years. Over the past decade Chick-fil-A has moved past Popeye's and even KFC in the race for market share among fast-food chicken restaurants. As of 2013, Chick-fil-A had 26% of the market to KFC's 22% and Popeye's 11%.

Retail Stocks to Watch No. 2: Sherwin-Williams Co. (NYSE: SHW)
One-year retail sales growth: 18.1%
Total 2013 U.S. sales: $6.2 billion
Americans must be doing a lot of sprucing up to get Sherwin-Williams's sales to jump more than 18% over 2012. Of course, like many other retailers on this list, Sherwin-Williams added a lot of stores - a 9% increase to 3,685 - which tends to boost revenue. SHW is up 18.57% in 2014. The shares closed at $217.57.

Retail Stocks to Watch No. 1: Amazon.com Inc. (NYSE: AMZN)
One-year retail sales growth: 27.2%
Total 2013 U.S. sales: $43.9 billion
Okay, no shocker here. Amazon blew away everyone else in terms of sales growth in 2013, even though its profits have suffered as the online retailing behemoth continues to plow the money back into the business. With more and more customers doing their shopping online, AMZN figures to dominate this category for a long time. It's been a rocky year for Amazon stock, but lately it has fared better. It's up nearly 11% over the past three months. AMZN closed at $342.38.

Follow me on Twitter @DavidGZeiler.

UP NEXT: Not all retailers have fared well post-recession. We've found three retailing stocks to watch that are ripe for short-selling....

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Why Starbucks is paying for college

  Starbucks paying for college? Really. NEW YORK (CNNMoney) Will a barista with a college degree want to remain a barista?

That's one question Starbucks (SBUX) will encounter as it begins offering employees free tuition for two years of online classes at Arizona State University. About 70% of Starbucks' 135,000 U.S. employees have not completed undergraduate degrees, and most are eligible for the program, the company said.

Employees aren't required to stay with the company after receiving their degrees, but CEO Howard Schultz isn't concerned about a mass exodus.

"This is an investment in our people, the most valuable asset that Starbucks has," he told CNNMoney's Poppy Harlow. "It's not the coffee, it's not the real estate, it's human capital and the person that wears the green apron."

Will graduates move on?

When employees who graduate take off their caps and gowns, it's entirely possible they'll also hang up those green aprons.

But Nick Setyan, an analyst who follows the industry, expects "there's going to be more than enough options" for those employees at the Starbucks of the future.

"They're consistently evolving in terms of what the stores are. I look at Starbucks as a consumer products company, not necessarily a coffee retailer," said Setyan, who is vice president of equity research at Wedbush Securities. The approximately $30,000 cost of two years of tuition is worth it to keep quality employees with the company, he said.

That's Schultz's vision, too. He said Starbucks has "never just been a coffee company," and to achieve the expected level of customer service, it needs bright workers who are there for the long term.

And even if they do leave, he added, Starbucks will be comfortable! that it contributed something to the U.S. economy.

What technology offers

While Starbucks is known for the coffee, its business model requires far more than beans, cups and a percolator.

Setyan points out Starbucks employees have opportunities beyond retail, such as managing the supply chain and marketing.

  Text, call or email for your latte

Starbucks has also stood out in the embrace of technology, such as its mobile payment app.

"There certainly has been a seismic change in consumer behavior and as a result of that every consumer brand has had to embrace technology," said Schultz. "I think our people who are going to graduate are going to find themselves with greater opportunities than just working in our stores as a result of the expansiveness of the company and the fact that as a company, our sights are set on a very high bar in terms of the future."

Cisco shares surge after hours; ExOne dives

Getty Images Cisco shares rally after quarterly results.

SAN FRANCISCO (MarketWatch) — Cisco Systems Inc. shares rallied in the extended session Wednesday after the computer equipment giant topped Wall Street estimates for the fiscal third quarter.

/quotes/zigman/20039/delayed/quotes/nls/csco CSCO 22.81, -0.05, -0.22% Cisco 12-month stock price

Cisco (CSCO) shares surged 7% to $24.43 on very heavy volume after the company reported adjusted fiscal third-quarter earnings of 51 cents a share on revenue of $11.55 billion. Analysts surveyed by FactSet expected 48 cents a share on revenue of $11.36 billion.

Shares of Cisco were the most actively traded stock after-hours with more than 9.2 million shares exchanging hands after the market close.

In Cisco's conference call with analysts , the company said it expects revenue in the current quarter to decline by 3% to 1%, not as bad as the 6% decline analysts expected.

Shares of Agilent Technologies Inc. (A)  declined 0.5% to $55.60 on moderate volume after the measurement instruments company reported adjusted fiscal second-quarter earnings of 72 cents a share on revenue of $1.73 billion. Analysts estimated 73 cents a share on revenue of $1.73 billion.

Also, Agilent forecast third-quarter earnings of 72 cents to 74 cents a share on revenue of $1.74 billion to $1.76 billion. Analysts expect 79 cents a share on revenue of $1.75 billion.

/quotes/zigman/14150718/delayed/quotes/nls/seas SEAS 29.34, -0.57, -1.91% SeaWorld 12-month stock price

Shares of SeaWorld Entertainment Inc. (SEAS)  rose 0.6% to $29.50 after an initial decline as the theme-park operator posted weaker than expected results on lower attendance numbers.

Jack In The Box Inc. (JACK)  shares fell 0.9% to $53.50 on moderate volume after the fast-food chain reported adjusted third-quarter earnings of 51 cents a share on revenue of $340.9 million. Analysts estimated 52 cents a share on revenue of $338.9 million.

ExOne Co. (XONE)  shares fell 12% to $27.10 on moderate volume after the 3D printer company reported a first-quarter loss of 38 cents a share on revenue of $7.3 million. Analysts were expecting a loss of 12 cents a share on revenue of $9.7 million.

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Cyber cops: Target hackers may take years to find

WASHINGTON (AP) — Secret Service investigators say they are close to gaining a full understanding of the methods hackers used to breach retailer Target's computer systems last December.

But the agency says it could take years to identify the criminals who stole some 40,000 debit and credit card numbers of Target shoppers and other personal information from as many as 70 million people in the pre-Christmas breach.

And it may take even longer to bring the offenders to justice. The federal investigation is complicated by the international nature of high-profile digital heists. The perpetrators are likely located overseas, which makes extradition and prosecution difficult. As a result, the Secret Service is focused on monitoring the online activities of its suspects, in hopes that they'll be able to arrest them at an opportune moment, says Ari Baranoff, an assistant special agent in charge with the Secret Service's criminal investigative division.

"We take a lot of pride in having a lot of patience," Baranoff said during a rare sit-down interview with the Associated Press at the agency's headquarters in Washington. "There are individuals we've apprehended that we've known about for 10 years and we're very comfortable indicting these individuals, sitting back and waiting patiently until the opportunity arrives that we can apprehend them."

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TIPS: How to protect yourself from credit card fraud

Target says it can't yet estimate what the breach will cost the company, but some analysts put it at close to half a billion dollars. The total cost of the breach —which also would include losses incurred by banks, consumers and others— could easily reach into the billions of dollars.

Target, which is in the midst of its own investigation, has said very little about how the breach happened, except that it believes the thieves gained entry to its systems by infiltrating computers owned by one of its vendors, thought! to be a Pittsburgh-area heating and refrigeration business.

Baranoff couldn't speak specifically about the federal investigation into the Target breach, since the case is ongoing, but he talked candidly about the growing threat of large-scale, financially motivated cybercrimes and the Secret Service's efforts to stop them.

Behind every major breach, there's usually a team of highly specialized cybercriminals who mainly know each other through online nicknames and reputations. Most aren't motivated by politics, just greed, Baranoff says.

If the hackers do invest in anything, it's their own operations. An increasing number are building their own server farms, sometimes leasing space to other criminals, making it harder for law enforcement to track them down.

Further complicating matters, Baranoff says the vast majority of high-level cybercriminals tend to be Russian speakers based in former Soviet and Eastern European countries, which largely puts them out of the reach of U.S. authorities.

But the Secret Service has strong ties with cybercrime agencies in many countries — including The Netherlands, Germany and the United Kingdom — and has found others to be helpful as well, even if they don't have extradition treaties with the United States.

While best known for protecting the president of the United States, the U.S. Secret Service was originally formed in 1865 to investigate crimes related to counterfeit currency. The passage of the Patriot Act following the Sept. 11 terrorist attacks expanded its role in investigating computer-related crimes.

From the agency's unassuming headquarters a few blocks from the bustle of the National Mall, special agents infiltrate online forums frequented by hackers, monitoring their activities, and creating online undercover identities in hopes of infiltrating criminal networks.

The same kinds of activities take place at the Secret Service's other electronic crimes task forces in the U.S. and overseas. The tactics the inv! estigator! s use are surprisingly similar to the law enforcement methods used by traditional beat cops everywhere. But digital investigations come with their own challenges. And based on the growing volume of stolen data now up for sale, hackers are becoming more sophisticated and more successful at evading justice.

Chester Wisniewski, senior security adviser for the computer security firm Sophos, says it's the Secret Service's ability to coordinate with law enforcement agencies around the world that make it effective in fighting cybercrime and help speed things up.

"With electronic crime, criminals move extremely fast and they're dependent on the police being tied up in red tape," Wisniewski says.

But challenges remain. After years of work, agents might be able to shut down a message board where stolen credit card numbers are bought and sold, but there's nothing to stop another from replacing it the next day, he says.

Meanwhile, political and economic pressure on countries known to harbor cybercriminals can also help, Wisniewski says, noting that U.S. promises of a better trade status helped eliminate much of the cybercrime that previously originated in Romania.

Despite all of that, many countries, including Russia, follow an unwritten rule: they won't pursue cybercriminals as long as they don't commit crimes in their own countries, Wisniewski says.

Baranoff says criminals could evade U.S. capture indefinitely if they stay hunkered down in their homes, but they're generally not happy staying put and like to spend their ill-gotten gains on trips to countries friendly to the U.S.

That's when authorities can make their move.

"These actors are making a lot of money and they want to travel," Baranoff says. "Some have suggested that there's no greater punishment actually than forcing them to stay where they are."

The Gap Inc. Posts Lower February Comps; Stocks Fall (GPS)

After the bell on Thursday, The Gap Inc. (GPS) announced its sales figures for February, which were down 7% from last year’s February sales

Gap’s sales for the month came in at $929 million, compared to last year’s February sales of $966 million. Last year, the sales were up 3% for the month. Gap put part of the blame for the lower sales on the extreme weather seen across the U.S. in February, which saw closures in 450 Gap stores.

For Gap Global, worldwide comparable store sales were down 10%, compared to 2% growth last year. Banana Republic had negative same store sales of 7% while Old Navy’s sales were down 6%.

Gap stock was down $1.54, or 3.64%, in pre-market trading. YTD, the company’s stock is up 9.22%.

Make Eye Contact, Smile, and Say Hello!

Have you ever been in a situation where you feel like you don't know anyone in the room, or you feel like the odd person out in a situation, or you are simply the new person on the scene? I know I have. As a child, our family moved a lot – and I mean a lot! While I was growing up my family moved from Oregon to Washington to Michigan to Virginia to Tennessee to Texas to California and then to Utah. I was constantly the new girl who knew no one. I still remember those feelings of being the new girl and the odd person out. It was scary and intimidating every time we moved to a new place.

I don't think it was until I became an adult first starting in the business world that I discovered something incredible. I was at a business event where I literally knew no one in the room. I felt totally out of place and uncomfortable. In my head I was thinking that everyone in the room was probably staring at me thinking, "Who is this girl and why does she think she is welcome here?"

Then something amazing happened. A total stranger came up to me and smiled and put out their hand to shake my hand and said hello. It was as if this person was a superhero sent there to save me from my feelings of absolute awkwardness. The person sat and talked to me for a minute or two and then moved on to say hi to the next person. I sat there for a moment and thought, "Wow! That was awesome of that person!" I wasn't bothered that they were talking to me. I was unbelievably grateful to them!

And there it was – the light went on in my head and I realized one of the most important lessons of my life: No one is ever going to be offended by having a stranger say hello to them. In fact, they will be grateful! Because nine times out of 10 everyone else in the room is feeling as awkward and uncomfortable as you are. Everyone wants to feel accepted and acknowledged, just like you do – so why not be the one to walk up to others and simply say hello. That is all it takes. Walk up to strangers in the room, make eye contact, smile, and just say hello. I promise you will change their world when you do that, just like the person in that meeting changed my world that day.

From that day forward I have been willing to walk up to the people in a room that I don't know and say hello. This new mantra has served me unbelievably well in my business life. It has opened doors and broken down walls and barriers in a moment. It has created bonds and friendships that have lasted for years.

All of us have an inherent need to belong, and all of us have the desire to be accepted and to feel included. Multiple studies have shown that the feelings of being included and accepted directly impact our psychological and our physical health, and that mental and health problems are more common among people who lack social attachments.

A study titled "To Be Looked at as Though Air: Civil Attention Matters" published in Psychological Science in January of 2012 by psychology professor Eric D. Wesselmann and three of his colleagues at Purdue University states: "Because social connections are fundamental to survival, researchers argue that humans evolved systems to detect the slightest cues of inclusion or exclusion. For example, simple eye contact is sufficient to convey inclusion. In contrast, withholding eye contact can signal exclusion. … Even though one person looks in the general direction of another, no eye contact is made, and the latter feels invisible."

As part of the study, they measured how people feel when they other people acknowledge them. To do this, they asked a college age woman to walk around a college campus with ~40,000 students. She randomly selected around 280 people and made one of three gestures – 1. She looked through them without making any eye contact, 2. She acknowledged them with eye contact, or 3. She acknowledged them with eye contact and a smile.

Following a little ways behind this woman was another person involved in this study. She would stop each person that the first girl had done one of the three gestures to, and without letting them know she was affiliated with the first girl, she would ask them two questions – 1. "Within the last minute, how disconnected do you feel from others, on a scale of 1-5?" and 2. "Within the last minute, have you experienced acknowledgment from a stranger, yes or no?"

The result of the survey is shown below:

The people who got no eye contact felt the most disconnected. The people who had the eye contact with the smile felt the most connected – and isn't it interesting that over half of them didn't even realize the eye contact with the first girl had occurred when they answered the question. This little study helps prove that our subconscious is picking up the positive acknowledgement received from others and it contributes to our feelings of acceptance and well-being. Now that is powerful!

Here is my advice: Don't wait for others to acknowledge you. Go out and acknowledge others, and watch the impact it has in your life. Watch the impact it has on your career. Then watch the impact it has on you.

~Amy (you can follow my daily blogs at www.amyreesanderson.com/blog )

 

Five Stocks With Fast Track Dividend Growth

By Richard Moroney

Companies in the S&P 500 Index paid a combined $311.77 billion in dividends in 2013, up 11% from 2012. That is below the three-year annualized growth of 15%, though that 15% is the best three-year rate in at least 25 years and reflects the restoration of some of the dividend cuts of 2009 and early 2010.

Will the robust growth continue? A look at historical precedents provides some clues. Last year, the S&P 500 Index paid out an estimated 32.6% of its earnings in dividends. The current payout ratio (dividends as a percentage of earnings) is higher than that seen during most of the 2003 to 2007 bull market but lower than the average of 39% over the last 25 years and 44% over the last 50 years. Lower payout ratios reflect greater flexibility to boost dividends going forward.

Index dividends accounted for 22.8% of estimated cash flow (net income plus depreciation) last year, slightly above the 10-year average. Dividends have risen as a percentage of both earnings and cash flow over the last two years — no surprise, given the aggressive dividend hikes and modest operating momentum.

The consensus projects per-share-profit growth of 11% for the index next year, a target many market watchers (including me) find overly optimistic.

The picture looks a little different when we consider dividends as a percentage of cash holdings. Last year, index companies paid out about 8.4 of their cash in dividends, below the 10-year average of 10.6%.

Higher dividends for the index don't just reflect a few massive payouts from the biggest companies; this is a marketwide phenomenon. In 2009, publicly traded companies announced 1,191 dividend increases or extra payments, versus 804 cuts or omissions.

The number of positive dividend actions rose in each of the next four years, and in 2013 good announcements (2,895) outnumbered bad announcements (299) nearly 10-to-1.

What does all this mean? If S&P 500 dividends keep growing 15% annually, the index's dividends as a percentage of earnings and cash flow will rise above historical norms, a trend that seems unlikely given corporate executives' caution regarding cash deployment and the financial sector's newfound focus on strong balance sheets.

That said, many companies have cash to spend and a commitment to raising the payout. In 2014, dividend growth of 9% to 15% seems likely. However, the index's dividend growth has averaged 6% annually since 1988, and growth seems likely to revert toward that long-run pace over the next few years.

Below are five stocks that have raised their dividends aggressively over the last year but still have the flexibility to fund more growth.

Fifth Third Bancorp Fifth Third Bancorp offers investors a blend of strong share-price action (up 38% in 2013) and a solid dividend yield of 2.3%, which exceeds its five-year average of 1.6% and the 1.8% average for regional banks in the S&P 500 Index.

The stock also trades at just 12 times trailing earnings, a 10% discount to its peer-group average. The quarterly dividend, currently $0.12 per share, has a long way to go before returning to its pre-recession high of $0.44 per share. But it consumes just 28% of trailing earnings, and management seems eager to raise the payout in the year ahead if it gets the Federal Reserve's blessing.

Current regulations prevent 30 large banks from paying dividends or buying back stock unless the Fed approves their capital-deployment proposals in March. Stock buybacks shaved 6% from Fifth Third's share count in the past year — only five of the 81 financial recession stocks in the S&P 500 Index repur- chased their stock more aggressively. Fifth Third is a Dow Theory Forecast Buy and a Long-Term Buy.

Kroger Kroger provides income-minded investors a play on a key component of higher dividend growth: steadily improving operating performance. Operating profit margins have risen in six straight quarters, while cash from operations increased in eight of the past 10 quarters and same-store sales climbed in 40 straight quarters. Last month, management reiterated its long-term profit-growth target of 8% to 11%.

The grocer still faces some challenges, particularly the November reduction in food stamps that has squeezed its least affluent shoppers. However, management believes that so far these shoppers have cut back in areas other than groceries. Eventually, Kroger's profit margins could compress as the company protects its market share by lowering prices. Nevertheless, the stock earns a Value rank of 89 despite its 55% total return in 2013, well ahead of the 33% average of S&P 500 consumer-staples stocks. Kroger, yielding 1.7%, is a Dow Theory Forecast Focus List Buy and a Long-Term Buy.