In this article, we will look at the 10 Best Retail Stocks To Invest In.
What Does the Holiday Shopping Season Look Like?
On December 2, Lindsey Bell, Chief Strategist at 248 Ventures, appeared on CNBC to discuss the consumer and economy in the holiday shopping season and the impact of proposed tariffs and the strong dollar on earnings. She said that the economy will see a resilient consumer, economy, and marketplace this week and at the end of the year. Bell expressed optimism going into the end of the year and was of the view that there is opportunity in retail at the present after staying in the shadows as a forgotten area.
As consumers have shifted in how they spend money and what they spend it on over the last several years, the retail sector is starting to see a comeback to discretionary items. Although an opportunity exists, retailers can only avail of it if they have the right merchandise at the right price or offer the right experience for the consumer. This is because the consumer is still value-oriented and price-sensitive simultaneously.
Tariff Threats: Are They Real for Investors and Consumers?
Concerns are circulating in the retail industry about the potential effects of “tariff threats” on the economy. Bell was of the view that it is undoubtedly necessary to stay on top of the potential threats that the president-elect’s proposed tariffs might cause to the markets.
However, she took us back to Trump’s first term as a president and the tariff increases he made, that Joe Biden continued in his term, highlighting that there wasn’t a significant lasting inflationary impact to them. She explained how tariffs work, saying that they go up when put on and have an impact in the near term, but eventually subside over time. The markets saw that in 2018 and 2019, while real inflation came in 2021 and 2022 with the pandemic. She reiterated that although the tariffs are something we need to keep an eye on, the scenario is not something we need to worry about from a consumer perspective this holiday shopping season.
Although the tariffs may not pose threats to consumers, what do they mean for investors? With the dollar up by half a percent at the time of the interview, concerns are rising about the dollar’s possible strength going into the next earnings season and the possible impact on rates that these “tariff threats” might bring about.
Bell agreed that the dollar’s strength impacts the earnings season, as about 50% of the S&P 500 gets its revenues from overseas multinational companies. She said that the dollar’s strength can continue into the year ahead, but this is a relative game. It is important to consider the currency and the strength of the economy around the world, as a strong dollar does depict a strong economy here in the US.
With these trends in view, let’s look at the 10 best retail stocks to invest in.
A woman in a retail store trying out a product, showcasing the retail colocation of the company.
Our Methodology
For this article, we used the Finviz stock screener to identify around 40 retail stocks and narrowed our list to 10 stocks with the highest number of hedge fund holders, as of fiscal Q3 2024. We sourced the hedge fund data from Insider Monkey’s database. The stocks are arranged in ascending order of the number of hedge funds that have stakes in them.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Retail Stocks To Invest In
10. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 45
Dollar General (NYSE:DG) is a discount retailer that offers an elaborate array of merchandise, including seasonal items, consumable items, apparel, home products, and more. Its merchandise includes brands from manufacturers and its own private brands that are sold at a discount.
The company has focused labor hours on perpetual inventory management in its store to improve its in-stock levels and support its sales growth. These efforts have paid dividends and have led to year-over-year improvements in its in-stock levels. Dollar General’s (NYSE:DG) merchandising and supply chain teams have also contributed to this in-store progress by simplifying operations for the company’s teams.
The company has also undertaken the first full-scale refresh of its sorting process within its distribution centers. With this initiative, Dollar General’s (NYSE:DG) ultimate goal is to enable its store teams to stock shelves more quickly and drive higher on-shelf availability for customers. This is expected to ultimately support ongoing sales and boost profitability. The company expects to complete this work by the end of the year. It ranks tenth on our list of the 10 best retail stocks to invest in.
9. Lululemon Athletica Inc. (NASDAQ:LULU)
Number of Hedge Fund Holders: 45
Lululemon Athletica (NASDAQ:LULU) is a technical athletic apparel retailer that also offers footwear and accessories. The company operates stores in the US, China Mainland, Canada, Australia, and South Korea. Its international markets are seeing continuous strength as the Lululemon brand is resonating with consumers around the globe.
One of the company’s largest opportunities is growing its business outside of North America. Lululemon Athletica (NASDAQ:LULU) is on track to quadruple its international revenue from 2021 levels by the end of 2026. The company’s near-term action plan involves leveraging its chase and fast-track design capabilities to bring more seasonal newness into its women’s assortment as promptly as possible. It is focusing on its strong performers, including its gold zip scuba in Softreme, aligned leggings in colors and prints, and new silhouettes and seasonal fabrics.
Lululemon Athletica (NASDAQ:LULU) plans to fast-track several new styles of performance shorts, tops, and tracksuits in 2025. Through these strategies, it aims to return to its historic levels of newness, no later than Spring 2025.
Middle Coast Investing stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its Q2 2024 investor letter:
“I mentioned last quarter and higher above that I like buying quality stocks on sale. Lululemon Athletica Inc. (NASDAQ:LULU), the 2nd worst performer in the S&P 500 this year, qualifies. I published a full thesis on the stock before its most recent earnings, but the basics: the yoga pants and clothing company has had an amazing post-pandemic run that is approaching its end. Its growth in the US is slow/non-existent at the moment, but it is growing very fast in China and Europe. I think that international growth is likely to endure, and that its US slowness is likely to be temporary. Lululemon shares are not ‘cheap’, but they are on sale for an average price, and I think the company will grow faster than average over the next five years. I would be wrong if Lululemon is a fad gone bust, or faces a huge post-pandemic hangover as people get used to leaving the house more. We’ll see.”
8. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 49
Target Corp (NYSE:TGT) is a general merchandise retailer that offers an elaborate array of products to its customers. It serves its guests at around 2,000 stores and digitally through Target.com. The company saw healthy traffic growth throughout fiscal Q3 2024, primarily attributed to its focus on delivering strong value and newness.
Target Corp’s comparable sales improved in fiscal Q3 2024, with the primary driver being a 2.4% growth in traffic. This represents more than 10 million incremental transactions compared with last year. The company experienced positive customer response to the thousands of price reductions it introduced earlier in 2024. To continue this trend, it introduced another 2,000 reductions entering the holiday season.
Target Corp’s (NYSE:TGT) digital channel is also undergoing positive growth, increasing by nearly 11% in fiscal Q3 2024. It experienced a nearly 20% growth in its same-day delivery powered by Target Circle 360, primarily attributed to an increase in guests learning about it and responding to the convenience and value it offers. The company also saw double-digital growth in Drive Up in fiscal Q3 2024, accounting for more than $2 billion in the quarter’s sales and reflecting the strength of its digital services. Target Corp (NYSE:TGT) ranks eighth on our list of the best retail stocks to invest in.
7. Abercrombie & Fitch Co. (NYSE:ANF)
Number of Hedge Fund Holders: 51
Abercrombie & Fitch (NYSE:ANF) is a digitally led, global omnichannel retailer that offers an assortment of apparel, accessories, and personal care products for men, women, and children. Its brands include Abercrombie & Fitch, Abercrombie Kids, and Hollister.
The company delivered net sales of $1.2 billion in fiscal Q3 2024, up 14% from fiscal Q3 2023. This growth was attributed to the company’s strong playbook, which delivered value for existing and new customers. Its sales are growing, primarily because more customers are responding to its experience and product voice. Abercrombie & Fitch (NYSE:ANF) is focusing on its store expansion strategy to continue this positive momentum. It plans to open around 40 new stores for Abercrombie brands in 2024, allowing customers convenience during the shopping season.
Positive trends for Abercrombie & Fitch (NYSE:ANF) were reflected across all its working regions in fiscal Q3 2024. The Americas grew by 14% and delivered the sixth consecutive quarter of double-digital sales growth. APAC and EMEA grew by 32% and 15%, respectively.
Carillon Eagle Small Cap Growth Fund stated the following regarding Abercrombie & Fitch Co. (NYSE:ANF) in its Q3 2024 investor letter:
“Abercrombie & Fitch Co. (NYSE:ANF) is a global multi-brand omnichannel specialty retailer of apparel, personal care products, and accessories for men, women, and kids. The stock lagged during the period despite reporting strong quarterly results and lifting forward guidance. We believe the performance is more a result of elevated investor expectations than any weakening of the underlying fundamentals, which we believe continue to remain strong.”
6. Burlington Stores, Inc. (NYSE:BURL)
Number of Hedge Fund Holders: 51
Burlington Stores Inc. (NYSE:BURL) is an off-price retailer of branded apparel. It also sells accessories, footwear, and home merchandise for relatively lower prices. The company operates more than 1000 stores, primarily under the brand name Burlington Stores.
Total sales for the company grew by 11% in fiscal Q3 2024, on top of 12% sales growth last year. The primary driver of growth for the company’s fiscal Q3 2024 earnings was its new store opening program. It is on the path to end 2024 with 101 net new stores.
However, the unseasonably warm temperature significantly impacted Burlington Stores Inc.’s (NYSE:BURL) comparable sales trend in fiscal Q3 2024. It reported healthy sales in its back-to-school season, one of the primary drivers of sales in Q3. However, the positive sales trend dropped from mid-September onwards. According to the company, the primary reason behind this impact was that its consumers still consider it a coat company.
Despite this headwind, Burlington Stores Inc. (NYSE:BURL) employed its conservation plan to keep tight control over its receipts and liquidity, reacting quickly to the warmer temperature. The company expects to regain its sales growth in the holiday season and the coming of winter. It ranks sixth on our list of the 10 best retail stocks to invest in.
Argosy Investors made the following comment about Burlington Stores, Inc. (NYSE:BURL) in its Q3 2023 investor letter:
“Burlington Stores, Inc. (NYSE:BURL) participates in the off-price retail category and competes against well-known players such as TJ Maxx and Ross Stores. BURL recently suffered from an inventory overhang that dented margins and is also suffering from a slowdown in same-store sales. With that said, the company has the capacity to double its stores, double its margins to levels consistent with peers, and expand same-store sales growth. On normalized margins, which the company last achieved in fiscal 2019, BURL is trading at ~10x earnings, with the potential to grow top-line low double digits, increase bottom line mid-teens, and increase EPS high teens over time.”
5. Ross Stores, Inc. (NASDAQ:ROST)
Number of Hedge Fund Holders: 55
Ross Stores (NASDAQ:ROST) is an off-price apparel retailer that operates home fashion stores under two brands: Ross Dress for Less (Ross) and DD’s Discount. It operates over 1,764 Ross store locations in 43 US states, the District of Columbia, and Guam. It also has over 345 DD’s Discounts stores across 22 US states. Customers can find discounted in-season designer and name-brand apparel at the company’s stores, along with footwear, accessories, and home fashion. The company’s discounts typically vary from 20% to 60% compared to regular department and specialty store prices.
Ross Stores Inc. (NASDAQ:ROST) completed its expansion program for 2024 in fiscal Q3 2024, adding 43 new Ross and four DD’s Discount stores. It added a total of 89 locations for the year, comprising 75 Ross and 14 DD’s Discount stores. The company plans to relocate or close seven locations in fiscal Q4 2024 and expects to end 2024 with 1,831 Ross stores and 354 DD’s Discount stores.
Ross Stores Inc.’s (NASDAQ:ROST) total sales for fiscal Q3 2024 grew to $5.1 billion, up from $4.9 billion in the prior year. However, several factors slowed its fiscal Q3 2024 sales, including severe weather from Hurricane Hilton and Lane and unseasonably warm temperatures late in the quarter. However, investors are bullish on the stock and expect these headwinds to be temporary. The fact that customers are leaning towards discounts and deals, especially in the discretionary items category, also falls in the company’s favor.
In its fourth-quarter 2023 investor letter, TimesSquare Capital Management mentioned Ross Stores, Inc. (NASDAQ:ROST):
“In Consumer-oriented sectors, we lean towards value-oriented or specialty retailers, franchise models, as well as premium brands. Also gaining 23% over the quarter was Ross Stores, Inc. (NASDAQ:ROST), an off-price retailer featuring apparel and home fashions. Third-quarter results were solid as sales comparisons accelerated with higher levels of customer traffic across geographies. Management raised full-year guidance. We added to the position given our increased conviction at the start of the quarter.”
4. Albertsons Companies, Inc. (NYSE:ACI)
Number of Hedge Fund Holders: 58
Albertsons Companies, Inc. (NYSE:ACI) is a US-based food and drug retailer. It has over 2,269 stores across 34 states and the District of Columbia under 20 banners, including Star Market, Shaw’s, Albertsons, Kings Food Markets, United Supermarkets, Haggen, Kings Food Markets, Acme, Carrs, and more.
The company experienced substantial growth in its pharmacy operations and digital sales in fiscal Q2 2024, primarily attributed to investments in its Customers for Life strategy. Albertsons Companies, Inc. (NYSE:ACI) also drove solid year-over-year growth in its omnichannel shoppers and loyalty members, along with accelerated growth in its Albertsons Media Collective.
Although the company has new and ongoing productivity initiatives, its operations are expected to see headwinds continuing into the balance of fiscal 2024. These headwinds are likely to be related to investments in associate wages and benefits, an increasingly competitive backdrop, and an increasing mix of its pharmacy and digital businesses, which carry lower margins.
Net sales and other revenue for the company was $18.6 billion in fiscal Q2 2024, compared to $18.2 billion in fiscal Q2 2023. This increase was driven by a 2.5% growth in identical sales, with strong growth in pharmacy sales driving the identical sales increase. Alberston Companies Inc.’s (NYSE:ACI) digital sales grew by 24% during fiscal Q2 2024. The company takes the fourth spot on our list of the 10 best retail stocks to invest in.
3. The TJX Companies, Inc. (NYSE:TJX)
Number of Hedge Fund Holders: 63
TJX Companies, Inc. (NYSE:TJX) is an off-price apparel and home fashion retailer in the United States and worldwide. The company’s fiscal Q4 2025 is off to a solid start, with goods available across a wide range of brands. It is flowing fresh assortments to its store and online for the holiday shopping season and beyond.
The company’s consolidated comparable sales grew at the high end of its plans in fiscal Q3 2025, driven entirely by customer transactions. Its apparel and home categories also saw comparable sales increases in fiscal Q3 2025. The TJX Companies, Inc. (NYSE:TJX) has a meaningful advantage as consumers can shop its value-added items every day without having to wait for promotional days or sales. Despite that, it is well-positioned as a one-stop shop destination for holiday gifts, with its assortment appealing to a broad range of income demographics.
After the holiday season, the company plans to continue its focus on being a year-round gifting destination. It plans to offer fresh merchandise online and in its stores multiple times a week. The company has more than 5,000 stores as of fiscal Q3 2025, and continues to see the potential to open 1,200+ stores with its current retail banners in its current countries. The TJX Companies, Inc. (NYSE:TJX) has announced plans to expand its T.K. Maxx banner in Spain, with the first stores expected to open in early 2026 and long term. The company sees the potential to open more than 100 stores in Spain.
Madison Investors Fund stated the following regarding The TJX Companies, Inc. (NYSE:TJX) in its Q2 2024 investor letter:
“The TJX Companies, Inc. (NYSE:TJX), an off-price retailer, continues to do well. Its value-based retail stores are resonating with consumers given the backdrop of higher inflation, which led to strong revenue and profit growth in the most recent quarter.”
2. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 75
Costco Wholesale Corporation (NASDAQ:COST) operates membership warehouses and e-commerce sites offering an elaborate selection of branded and private-label products in a broad category range. The company attained its target of 30 new warehouse openings in fiscal 2024, which included one relocation and resulted in 29 net new buildings. It expanded its operations to Maine, bringing it to 47 states in the US. The company is also seeing growth opportunities worldwide, with its fiscal 2025 plans holding 12 of its planned 29 openings outside the US.
With three of the company’s warehouses being relocations, it has plans to add 26 net new buildings in fiscal 2025. In addition, Costco Wholesale Corp (NASDAQ:COST) is expanding its e-commerce business, with Costco Logistics also running on a positive momentum. Much of the growth was attributed to appliances and furniture in big and bulky. Logistics delivered more than 4.5 million items in the year, up 29% over the prior year.
The company is continually enhancing its member experience by improving delivery times, scheduling functionality, and item assortment. Costco Wholesale Corp (NASDAQ:COST) ranks second on our list of the best retail stocks to invest in.
Madison Sustainable Equity Fund stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q3 2024 investor letter:
“Costco Wholesale Corporation (NASDAQ:COST) continues to demonstrate its commitment to sustainability by lowering its emissions. For example, it has converted its Kirkland Signature laundry packs from plastic tubs to a pouch. This has reduced plastic packaging by 80%. It has also moved to localize production of bulky items such as water, paper, and laundry detergents. Manufacturing these goods closer to the countries in which they are sold reduces emissions associated with shipping.”
1. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Walmart Inc. (NYSE:WMT) is an omnichannel retailer that operates retail and wholesale stores and clubs, e-commerce websites, and mobile applications. It offers an elaborate array of items, ranging from general merchandise and electronics to food, groceries, and more.
The company’s fiscal Q3 2025 earnings showed sales growing by 6.1% in constant currency and profit growing by 9.8%. E-commerce was one of the primary drivers of growth worldwide, up 27%. Other growth drivers included advertising and membership income, which grew by 28% and 22%, respectively. These trends allowed the company to grow profits faster than sales while simultaneously working to lower prices and invest in its associates.
The rapid growth from these newer businesses is allowing Walmart Inc. (NYSE:WMT) to strengthen its business model. It is continuing to gain market share in the US in both general merchandise and grocery. Further trends in the US in fiscal Q3 2024 saw growing in-store volumes, faster curbside pickup, and an increase in delivery sales. There was no like-for-like inflation in the US in fiscal Q3 2025. Walmart Inc. (NYSE:WMT) is becoming more convenient for its customers and members, and that is helping it drive growth.
Overall, WMT ranks first among the 10 best retail stocks to invest in. While we acknowledge the potential of retail stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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