In this article, we discuss the 10 best retail stocks to buy now. If you want to read about some more retail stocks, go directly to 5 Best Retail Stocks to Buy Now.
As per Retail Global Market Report 2022, the global retail market was valued at roughly $23.65 trillion in 2021. The market is expected to reach a valuation of $26.33 trillion by the end of 2022 at a compound annual growth rate (CAGR) of 11.3%. The market size is forecasted to be worth approximately $38.71 trillion by 2026 at a compound annual growth rate of 10.1%. This growth is attributed to the use of data analytics in management by retailers to enhance supply chain efficiency, streamline operations to engage customers, and build loyalty.
Despite the large size of the market itself, some of the leading retail stocks have struggled this year due to an unsteady economic climate brought on by rampant inflation, rising interest rates, supply chain disruptions, and rising inventories. Since March 2022, the Federal Reserve has raised the benchmark interest rates five times in response to growing inflation. Currently, inflation is at 40-year highs. The consumer price index (CPI) for October 2022 climbed 7.7% over the previous year, according to a report released by the Bureau of Labor Statistics on November 10.
However, analysts remain optimistic about the long-term prospects of the retail sector and foresee a rebound in the strongest retail stocks during the holiday season. According to the National Retail Federation (NRF), a new record of $942.6 billion is anticipated for holiday retail sales in November and December 2022, up 6-8% from last year. Online and non-store sales are projected to rise by 10-12% to meet the target of $263 billion over the holidays. The organization estimates that each American will spend about $832 on gifts, food, and decorations this year.
Therefore, to keep up with the rise in demand during the holidays, retailers have positioned themselves in line with the anticipated shift in customer behavior. Several businesses, including Walmart Inc. (NYSE:WMT), The Home Depot Inc. (NYSE:HD), and Amazon.com Inc. (NASDAQ:AMZN), are making use of aggressive pricing strategies and discounts to increase market share. As such, we have compiled a list of the best retail stocks to buy now.
Our Methodology:
We selected the following retail stocks based on favorable analyst coverage, strong business fundamentals, and future growth prospects. These stocks are also popular among the 920 hedge funds tracked by Insider Monkey as of the end of the third quarter.
Photo by Austin Distel on Unsplash
Best Retail Stocks to Buy Now
10. MarineMax, Inc. (NYSE:HZO)
Number of Hedge Fund Holders: 16
MarineMax, Inc. (NYSE:HZO), headquartered in Clearwater, Florida, is a recreational boat and yacht retailer. Retail Operations and Product Manufacturing are its two operating segments. The company has 78 retail locations in America. In August, MarineMax, Inc. (NYSE:HZO) announced that it would pay $480 million to acquire Island Global Yachting LLC, an owner and operator of marina assets and a yacht management platform.
The company beat market expectations on earnings per share and revenue in the fourth fiscal quarter. For FY 2023, earnings per diluted share is expected to be in the range of $7.90 to $8.40, compared to a consensus of $7.70.
Analysts like the stock. On October 28, B. Riley analyst Eric Wold maintained a Neutral rating on MarineMax, Inc. (NYSE:HZO) stock and raised his price target to $35 from $32, following the company’s recent quarterly earnings.
Arrowstreet Capital owned roughly $12 million worth of stakes in MarineMax, Inc. (NYSE:HZO), becoming the company’s leading stakeholder in Q3 2022. Overall, 16 hedge funds tracked by Insider Monkey owned stakes in the company in Q3. These stakes hold a combined value of over $45.6 million.
In addition to Walmart Inc. (NYSE:WMT), The Home Depot Inc. (NYSE:HD), and Amazon.com Inc. (NASDAQ:AMZN), MarineMax, Inc. (NYSE:HZO) is one of the best retail stocks to invest in.
In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and MarineMax, Inc. (NYSE:HZO) was one of them. Here is what the fund said:
“MarineMax (NYSE:HZO) is the world’s largest recreational boat and yacht retailer. The company’s shares were pressured in the quarter as investor concerns regarding a potential slowdown in the economy have weighed on stocks in the boating industry as a whole. MarineMax was a beneficiary of the pandemic, which resulted in an influx of new boaters who are embracing the boating lifestyle, and there remains some investor debate surrounding the degree to which these higher levels of demand are sustainable.”
9. Levi Strauss & Co. (NYSE:LEVI)
Number of Hedge Fund Holders: 20
Levi Strauss & Co. (NYSE:LEVI), noted especially for its blue denim jeans, is one of the biggest clothing firms in the world.
In the third fiscal quarter, Levi Strauss & Co. (NYSE:LEVI) reported an EPS of $0.40, beating estimates by $0.03. Its revenue for the quarter came in at $1.52 billion, which showed a 1.3% growth from the same period last year. Matthew Boss, an analyst at JPMorgan, decreased his price target on Levi Strauss & Co. (NYSE:LEVI) from $20 to $19 on November 29 while maintaining an ‘Overweight’ recommendation on the stock. Any encouraging news on holiday sales might send the company on a bull run, making it one of the greatest retail companies to purchase right now.
As of November 18, 2022, Citadel Investment Group is the largest shareholder in Levi Strauss & Co. (NYSE:LEVI) in our database and holds a stake worth more than $28.5 million.
8. Foot Locker, Inc. (NYSE:FL)
Number of Hedge Fund Holders: 24
Foot Locker, Inc. (NYSE:FL), operating in 28 countries, is an American sportswear and footwear retailer. It is one of the best retail stocks to buy now.
Analysts are bullish on the firm’s long-term prospects, with investment advisories like Barclays, Deutsche Bank, Cowen, and Citi raising their price targets on the stock in November.
Given its financial stability and expansion prospects, the company has the potential to grow earnings in the long term. On November 18, Foot Locker, Inc. (NYSE:FL) declared a quarterly dividend of $0.40 per share, in line with the previous. The company’s dividend yield on December 2 came in at 4.08%.
24 hedge funds in Insider Monkey’s database had Foot Locker, Inc. (NYSE:FL) in a bullish position at the end of the third quarter of 2022. These hedge funds held shares in the firm worth about $193.7 million. Vesa Equity Investment, with a position worth $384.5 million, stood as the most significant shareholder of Foot Locker, Inc. (NYSE:FL).
7. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 31
Macy’s, Inc. (NYSE:M), founded by Xavier Warren in 1929, is a retail company that operates department stores, websites and mobile applications. The company has a significant competitive edge in the retail sector due to its comprehensive product portfolio, global reach, and customer base.
In addition to posting market-beating Q3 results, Macy’s, Inc. (NYSE:M) reaffirmed its FY2022 outlook. The company expects net sales of $24.34 billion to $24.58 billion, versus a consensus of $24.48 billion. Adjusted diluted EPS is projected to fall between $4.07 to $4.27, compared to a consensus of $4.10.
On November 18, Citi analyst Paul Lejuez raised his price target on Macy’s, Inc. (NYSE:M) stock to $25 from $21 and reiterated a Neutral rating on the shares. Lejuez noted that the company’s Q3 was better than guidance and consensus estimates.
According to Insider Monkey’s Q3 data, 31 hedge funds were long Macy’s, Inc. (NYSE:M), with combined stakes worth over $779.7 million, compared to 40 funds in the prior quarter worth $966.8 million. Arrowstreet Capital is the leading position holder in the company, with over 10 million shares valued at $165.7 million.
In its Q3 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Macy’s, Inc. (NYSE:M) was one of them. Here is what the fund said:
“Meanwhile, Macy’s, Inc. (NYSE:M), an omnichannel retail organization that operates stores, websites, and mobile applications under the Macy’s, Bloomingdale’s, and Bluemercury brands, also had a strong quarter (+21.5%). Macy’s delivered strong second-quarter earnings, beating on earnings and revenue and raising guidance as the retailer continues to pay down debt and grow its digital business.”
6. Ulta Beauty, Inc. (NASDAQ:ULTA)
Number of Hedge Fund Holders: 54
Ulta Beauty, Inc. (NASDAQ:ULTA), headquartered in Bolingbrook, Illinois, is an American chain of beauty stores. The company offers both expensive and budget-friendly cosmetics, fragrances, nail products, bath and body products, beauty tools, and haircare products.
Given its scale, Ulta Beauty, Inc. (NASDAQ:ULTA) has higher margins than many of its competitors which makes it a solid retail stock to invest in. On December 1, the company posted earnings for the third quarter of 2022, reporting an EPS of $5.34. The revenue over the period was $2.3 billion, up 15.0% compared to the revenue over the same period last year.
As December began, investment advisories like DA Davidson, Deutsche Bank, Baird, Citi, Oppenheimer, and Piper Sandler raised their price targets on Ulta Beauty, Inc. (NASDAQ:ULTA) stock, reflecting the optimism of Wall Street.
At the close of the third quarter of 2022, 54 hedge funds were long Ulta Beauty, Inc. (NASDAQ:ULTA) and held stakes worth $1.6 billion in the company. Of those, Arrowstreet Capital was the top investor that held a position worth $280.5 million in the company.
Like Walmart Inc. (NYSE:WMT), The Home Depot Inc. (NYSE:HD), and Amazon.com Inc. (NASDAQ:AMZN), Ulta Beauty, Inc. (NASDAQ:ULTA) features as one of the best retail stocks to invest in.
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Disclosure. None. 10 Best Retail Stocks to Buy Now is originally published on Insider Monkey.