After years of stagnant earnings growth, and at one point, double-digit unemployment, the wages of workers in the United States are finally moving higher. Combined with a massive sell-off in oil, a perfect storm is brewing for some top stocks to buy. A new report from Jefferies points out that since 2013 the Federal Reserve’s labor market conditions have shown consistent month-to-month increases. Even small businesses are looking for ways to raise wages to keep good employees.

The Jefferies report also points out that the recent hike in wages for 500,000 Wal-Mart Stores Inc. (NYSE: WMT) employees could help to increase the pressure to raise the minimum wage. Higher wages and lower costs from gasoline prices put more spending money in consumers’ pockets. The Jefferies team see Dollar General Corp. (NYSE: DG), Home Depot Inc. (NYSE: HD) and Kohl’s Corp. (NYSE: KSS) as three top retail stocks that may see an immediate benefit.

Dollar General

This is one of the nation’s top discount retailers, carrying a huge inventory of items designed to appeal to a cost-conscious consumer. It announced recently that it will be accelerating new store openings next year, after losing a furious bidding war for Family Dollar Stores Inc. (NYSE: FDO) to rival Dollar Tree Inc. (NASDAQ: DLTR). The discount retail giant plans to open 730 stores this year, representing a staggering 6% square footage growth, with another 875 stores to be relocated or remodeled. These aggressive expansion plans have been applauded by analysts on Wall Street.

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Dollar General currently has 11,800 stores nationwide, so the planned increase the company announced when it released earnings represents a huge 14% jump in the number of open stores in just two years. The company often focuses on smaller communities where a giant big-box store is a tougher proposition to make profitable.

Dollar General investors are paid a 1.2% dividend. The Jefferies price target for the stock is $87. The Thomson/First Call consensus price target is lower at $80.50. The stock closed on Tuesday at $74.72.

Home Depot

Home Depot remains one of the top consumer discretionary stocks to buy on Wall Street, and it is coming into the sweet spot of the year for sales. Between the spring cleaning activity, and the increase in Americans once again looking for a new home, the time is ripe for investors looking to own a top retail stock. Home Depot also is becoming a darling of some quantitative hedge funds, as some see the stock as way undervalued on an intrinsic basis.

In addition to the company’s already huge domestic presence, some Wall Street analysts have pointed to the recent troubles at Sears Holdings Corp. (NASDAQ: SHLD) and Lumber Liquidators Holdings Inc. (NYSE: LL) as even more solid impetus for the home improvement giant.

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Home Depot investors are paid a very respectable 2.05% dividend. Jefferies puts a $135 price target on the stock, while the consensus target is $123.77. The stock closed Tuesday at $115.58 a share.

Kohl’s

This department store discount leader is another top retail stock to buy on the Jefferies list. Last fall, Kohl’s launched two key national brands in its stores: Izod (for men) and Juicy Couture (for women). The company also implemented a nationwide roll-out for the new customer loyalty program it had been testing. Plus, in an important move to increase Internet sales, Kohl’s has been improving its e-commerce capabilities.

The company recently boosted the dividend payout for investors, and the stock has seen a very solid move to the upside over the past six weeks.

Kohl’s investors are paid a tidy 2.45% dividend. The Jefferies price target is $82, well above the consensus figure of $73.90. The shares ended Tuesday at $74.33 apiece.

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Earnings and wage growth have been stubbornly slow over the past five years. The recent bump is not only great for American consumers and households, it also bodes extremely well for the overall economy.

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