10 Cheap Retail Stocks to Buy According to Analysts

3. Build-A-Bear Workshop, Inc . (NYSE:BBW)

Forward P/E: 8.83

Analyst Upside Potential as of September 23, 2024: 21.07%

Number of Hedge Fund Holders as of Q2 2024: 15

Build a Bear (NYSE:BBW) is a retailer where children and adults can make their own stuffed animals by choosing the stuffing, fluffing, accessorizing, dressing, and naming of their choice. They can make a bear or other plush animal out of scratch, controlling every step of the manufacturing process. The company operates in three segments: commercial, direct-to-consumer (DTC), and international franchising.

The DTC segment manages the operating activities of stores managed by corporate, along with online sales and other retail-delivered options. The commercial segments encompass transactions with other businesses. It oversees wholesale sales of supplies and fixtures, merchandise, entertainment activities, and licensing of the company’s intellectual properties for third-party use. The international franchising segment manages the operations of franchises that operate store locations in particular countries. These operations include sales-based royalties, development fees, supplies and fixture sales, and merchandise.

Build a Bear (NYSE:BBW) operates more than 359 corporate-managed stores around the globe. It is evolving its business model with the objective of sustained profitable growth. Due to the power and affinity of the brand in the market, Build a Bear (NYSE:BBW) holds a competitive advantage. It is expanding its consumer base beyond kids to leverage the company’s growing multi-generational appeal. By introducing items like collectibles and trim products, the company has experienced an increase in teen and adult business, which now accounts for 40% of its total retail sales.

Build a Bear (NYSE:BBW) is driving consumer engagement with the brand by expanding its geographical reach and store types beyond the traditional mall-based, US-focused stores. By the end of fiscal 2024, the company expects to open around 90 net new locations over the past two years. It is also evolving its product categories, introducing new customizable characters like the Mini Beans collectibles, which have already sold more than 1.5 million units since their launch at the beginning of the year.

Such initiatives made Q2 2024 the most profitable second quarter in the company’s history, with revenues growing by 2.5% and reaching nearly $112 million. The company’s pretax income increased by more than 10% to $11 million. Build a Bear (NYSE:BBW) ranks third on our list of the 10 cheap retail stocks to buy according to analysts.