Who doesn’t want a portfolio that generates higher returns? However, the mixed bag of events in the domestic turf is leaving investors perplexed about which stocks to count on.

On the one hand, the recent weak June retail sales data raises concerns over a step up in economic activity, while on the other, a dismal back-to-school season sales forecast points to cautious customer spending. Moreover, with first-quarter 2015 GDP contracting 0.2% and the dollar still gaining strength, retail stocks remain susceptible to a number of events.

Looking at the aforementioned factors, you would either want to be absolutely sure when it comes to investment activities or stay away from the market until things begin to improve. But is everything so dull? Certainly not! There are positive commentaries indicating that the economy is on a recovery track, thereby diminishing investors’ fear.

According to a recent Conference Board data, the Consumer Confidence Index increased to 101.4 in June from the May reading of 94.6. A gradual recovery in the housing market as well as the manufacturing sector coupled with an improving labor market played a major role in lifting buyers’ confidence. With the unemployment rate hovering around 5.3% and total nonfarm payroll employment increasing by 223,000 last month, job prospects look better. Moreover, as global issues surrounding Greece and China settle down, positive sentiment ought to prevail.

It is quite apparent that the market has witnessed a slew of events and to fetch higher returns amid such an investment climate is a difficult task. Well, now there are two choices in front of you; either be a mute spectator and wait for a convincing economic environment, or be a front-runner and winner by identifying stocks that have the potential to outperform even when market conditions are not congenial.

4 Retail Growth Picks

We have identified 4 Retail-Wholesale Stocks based on their Favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or #2 (Buy) + Positive Zacks Earnings ESP+ Growth Style Score. A stock with such a combination has incredible potential in the near term.

A favorable rank indicates positive estimate revisions by analysts who are optimistic on the future performance of companies. Moreover, Earnings ESP is our proprietary methodology for identifying stocks that have the best chance of surprising with their next earnings announcement.

Zacks has also designed the new Style Score System. The attractiveness of a stock as an investment option is confirmed by its Growth Style Score of “A” (or “B”). The Growth Style Score combines conventional growth metrics with a thorough analysis of the company’s income statement, balance sheet and statements of cash flows to evaluate its financial health and the sustainability of its growth trajectory. Our research shows that stocks with Growth Style Scores of A or B when combined with a Zacks Rank #1 or #2 offer the best upside potential.

We suggest investing in Red Robin Gourmet Burgers Inc. (RRGB - Analyst Report), which has an Earnings ESP of +2.63% and a Growth Score of “B.” The current Zacks Consensus Estimate for the second quarter of 2015 stands at 76 cents a share, reflecting 12.2% growth from the prior-year quarter. This Greenwood Village, CO-based casual dining and fast-casual restaurant operator, registered an average positive earnings surprise of 11.9% over the trailing four quarters, and has a long-term earnings growth rate of 11.3%. This Zacks Rank #1 company is expected to report results on Aug 13.

Lithia Motors Inc. (LAD - Analyst Report), which operates as an automotive franchisee and retailer of new and used vehicles, is another solid bet, with a Growth Score of “B.” The stock holds a Zacks Rank #2, and has a long-term earnings growth rate of 22.4%. Based in Medford, OR, Lithia Motors delivered an average positive earnings surprise of 10.1% over the trailing four quarters, and has an Earnings ESP of +0.61%. The current Zacks Consensus Estimate for the second quarter of 2015 is pegged at $1.65 per share, reflecting 22.8% year-over-year growth. The company is slated to report results on Jul 22.

Investors can also count on Whole Foods Market, Inc. (WFM - Analyst Report), the retailer of natural and organic foods that carries a Zacks Rank #2, Growth Score of “A” and has an Earnings ESP of +2.22%. The current Zacks Consensus Estimate for the third quarter of fiscal 2015 stands at 45 cents a share, reflecting 9.6% growth from the year-ago period. This Austin, TX-based company registered an average positive earnings surprise of 4.8% over the trailing four quarters, and has a long-term earnings growth rate of 12.1%. The company is scheduled to report results on Jul 29.

Last but not least is ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Snapshot Report), with an Earnings ESP of +0.90% and a Growth Score of “B.” The current Zacks Consensus Estimate for the second quarter of fiscal 2015 stands at $1.11 per share, portraying 18.4% growth from the prior-year quarter. Based in Bolingbrook, IL, ULTA Salon delivered an average positive earnings surprise of 10.8% over the trailing four quarters, and has a long-term earnings growth rate of 19.6%. This Zacks Rank #2 company is expected to report results on Sep 10.

Bottom Line

You would definitely like to keep those stocks in your portfolio that possess higher chances of beating earnings estimates when they report results. Further, backed by a favorable Zacks Rank and superb growth metrics, these stocks can bring in higher returns.