Retail Stocks to Watch Now

This wretail stockseek is a busy one for retail stocks.

A handful of major players are on tap to post results, including J.C. Penney Co. Inc. (NYSE: JCP), Macy's Inc. (NYSE: M) and Wal-Mart Stores Inc. (NYSE: WMT). Friday brings the U.S. Department of Commerce's retail sales data for October. Economists project a 0.2% month over month gain, a welcome improvement from September's 0.3% decrease.

Lower gas prices are the main reason to expect a retail sales rise. The national average price for a gallon of unleaded gas is currently $2.99, down from $3.70 in late June, according to AAA. It's the first time since 2010 that pump prices are below $3 a gallon.

A drop in gasoline prices usually translates to more spending by consumers - like a tax cut. The timing of this gas-price dip should be a good boost for this year's holiday sales. According to Mark Zandi of Moody's Analytics, consumers are expected to release two-thirds of their gas cost savings into the U.S. economy.

Retail stocks could use the help. The sector only rose 2.6% last month.

What matters more than Friday's report when it comes to retail stocks is this week's earnings and forward guidance. Five big-name retailers will report, and most need wins to keep investors.

Here's a look at five retail stocks to watch this week, and what to expect from their reports.

Five Retail Stocks to Watch This Week

Hot Stock No. 1: Macy's Inc. (NYSE: M) is on tap to post Q3 results before Wednesday's opening bell. Forecasts are for earnings per share (EPS) of $0.51, up from $0.47 in the same quarter a year ago. Whisper numbers are for EPS of $0.53. Revenue is seen coming in at $6.36 billion, up from $6.28 billion year over year (YOY). The Cincinnati, Ohio-based retailer disappointed in Q2. Last quarter's EPS result of $0.80 missed estimates by $0.06. The mid-range retailer did, however, post a 3.3% YOY increase in total sales to $6.27 billion. Despite the earnings miss, Macy's said it expects sales for the second half of 2014 to be "on track" with comparable store growth of 2% to 3%. The company is pulling out all the stops to get consumers into its department stores this holiday season. Beginning at 6 p.m. on Thanksgiving Day, shoppers will find "great Black Friday weekend deals at Macy's stores and online at," the company said in a statement. Shares are up 12.34% year to date.

Hot Stock to Watch No. 2: J.C. Penney Co. Inc. (NYSE: JCP) is set to release Q3 numbers after Wednesday's close. Expectations are for an EPS loss of $0.78, down sharply from an EPS loss of $1.85 in the same quarter a year ago. Whisper numbers have the EPS loss coming in at $0.75. At an analyst day last month, Penney's said same store sales for October would likely rise at a low-single digit pace, versus earlier guidance for mid-single-digit growth and reported growth of over 6% during 2014's first half. It's also troubling that sales estimates for future quarters have been trimmed. Wall Street analysts now expect 4.3% same store sales growth in 2015, down from 5.8% in September. Investors are worried JCP's robust first half was an anomaly, and will want confirmation a turnaround continues. The company last month named Marvin Ellison, a former Home Depot Inc. (NYSE: HD) exec, as its new chief executive officer (CEO). He takes the helm in August 2015. Shares, down some 22% since the end September, are off 19.35% year to date.

Hot Stocks to Watch No. 3: Wal-Mart Stores Inc. (NYSE: WMT) will report Q3 results Thursday morning. Analysts are looking for the world's largest retail store chain to post EPS of $1.12, down from $1.14 in the same quarter a year ago. Whisper numbers are for EPS of $1.13. WMT recently trimmed its forecast for sales growth in the current fiscal year to between 2% and 3% from a prior range of 3% to 5%, citing lower food-stamp payments and a stronger dollar. Last month, WMT announced plans to cut the number of massive supercenters it plans to build. It will instead invest more in e-commerce, which represents the fastest-growing part of its business yet continues to generate operating losses. WMT said its yearly e-commerce sales could approach $35 billion by early 2018, up from $10 billion in 2013. But it warned of a rough stretch for sales and profits as it moves ahead with its ambitious overhaul. CEO Doug McMillon told investors the company is thinking long-term and is willing to be patient. He asked investors to do the same. With shares little changed year to date, shareholder patience may be running thin.

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Hot Stocks to Watch No. 4: Nordstrom Inc. (NYSE: JWM) reports Q3 earnings after Thursday's closing bell. Wall Street expects the upscale fashion retailer to post EPS of $0.71, up from $0.69 in the same quarter a year ago. Whisper numbers are for EPS of $0.73. Q2 EPS results of $0.95 beat forecast by a penny, representing a modest 2.2% YOY grow. Revenue of $2.84 billion was roughly in line with estimates of $2.86 billion. Bucking the trend, Nordstrom will keep with tradition and not open on Thanksgiving, aka Black Thursday. The company said in a statement, "We believe in celebrating one holiday at a time. Our employees work especially hard during the holiday season and we simply believe that they deserve the opportunity to spend Thanksgiving with their families." Shares are up 17.52% year to date.

Hot Stocks to Watch No. 5: Kohl's Corp. (NYSE: KSS) will post Q3 results before Thursday's open. Expectations are for EPS of $0.75, down from $0.81 in the same quarter a year ago. Whisper numbers are for EPS of $0.76. The specialty retailer recently lowered its earnings guidance for fiscal year 2014 due to sluggish sales toward the end of Q3. Kohl's warned last month it expects comparable sales to decline 1.4% in Q3. However, Kohl's is optimistic about its e-commerce business, and expects e-commerce sales to increase over 30% for Q3. Shares are up 1.09% year to date.

What to Read Now: This U.S. retailer has been up and down in recent years, but it's finally time to let go of it if you're still holding this stock... There's nowhere to go but down, and here's why.