In this article, we will look at the 10 Cheap Retail Stocks to Buy According to Analysts.
Overview of Recent Consumer Buyer Trends and the Retail Sector
On September 18, the Fed cut interest rates for the first time since the Covid-19 pandemic, slashing the benchmark rate by half a percentage point. This brought to a range between 4.75% and 5%. The adjustment aims to relieve consumers and businesses suffering from high borrowing costs and protect the labor market, which was showing signs of slowing. This strategic move by the Fed is interpreted as a sign of relaxation against inflation and a welcome change for businesses and consumers.
Although the impact of the lower interest rates is expected to be substantial, it will likely take time to make its way through the economy. The prospect has, however, strengthened confidence in Americans that inflation will continue to cool, paving the way for good days ahead. According to research by BCG, consumer confidence is already recovering, albeit slowly, across the world and in the US. With people increasingly believing that their personal finances are improving, the sentiment is likely to continue on an upward trajectory if circumstances do not change.
A recent survey by the Center for Customer Insight (CCI) suggests that the extent to which increasing consumer confidence will translate into increasing consumer spending is likely to vary across markets and product categories. The survey reported that the percentage of respondents with personal finance concerns dwindled from 39% in 2023 to 26% in 2024. These trends are significant for retailers, as the financial health of consumers in the country affects the categories and services they prioritize when spending money.
The Future of the Retail Sector
According to the WTW Global Retail Survey for 2024, around 52% of retailers this year expect increased profitability in the coming two years. In addition, approximately 48% of retailers are looking to leverage artificial intelligence in their operations to offer their customers a personalized and efficient shopping experience. However, with more and more businesses turning towards AI, around 43% of the respondents voiced concerns about high cybersecurity risks likely to arise with increasing reliance on new technologies. Despite the risks, a majority of retailers are incorporating AI into their operations, streamlining and expediting their functioning.
On June 24, Simeon Gutman, an analyst at Morgan Stanley, joined CNBC’s “The Exchange” to discuss the impact of tech and AI on retailers and how these companies are leveraging technology to boost profit margins. Here is what to say about retail companies in this respect:
“Walmart’s the one that comes to mind the first…, you’re hitting the nail on the head with several of these aspects of tech diffusion, and on top of it, they’re gaining market share in terms of tech diffusion. AI is easily one of them, big scale, lots of data, a lot of opportunity to go through their data and enhance both the frontend of their business, drive more sales to customers, make things easier, and improve the backend.”
According to Gutman, big-box retailers are taking the lead in infusing tech and AI into their internal operations, increasing profit margins and streamlining operations. Such innovative trends may allow the retail industry to bounce back in the market, taking the lead and leading the change.
With these optimistic trends in mind, let’s examine the 10 cheap retail stocks to buy according to analysts.
10 Cheap Retail Stocks to Buy According to Analysts
Our Methodology
We first consulted stock screeners from Finviz and Yahoo Finance, along with online rankings, to create an initial list of 15 publicly traded retail companies with a forward P/E ratios of less than 23 (the broader market is trading at a forward P/E of 23, as per data from WSJ). From this list, we selected the 10 stocks with the highest analyst upside potential as of September 23, 2024, and used that as our ranking metric.
Why are we interested in 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 Cheap Retail Stocks to Buy According to Analysts
10. CVS Health Corporation (NYSE:CVS)
Forward P/E: 8.92
Analyst Upside Potential as of September 23, 2024: 9.51%
Number of Hedge Fund Holders as of Q2 2024: 60
CVS (NYSE:CVS) is a health solutions retailer that operates in four segments: health care benefits, health services, pharmacy & consumer wellness, and corporate/other. The health care benefits segment offers an elaborate range of voluntary, traditional, and consumer-directed health insurance products and related services. These include medical, pharmacy, medical management capabilities, dental and behavioral health plans, Medicare Advantage, Medicaid health care management services, and Medicare supplement plans.
The Health Services segment specializes in a complete range of pharmacy benefit management solutions and delivers healthcare services in its medical clinics, at home, and virtually, offering provider enablement solutions. The Pharmacy & Consumer Wellness segment dispenses prescriptions in retail pharmacies. It also provides diagnostic testing, pharmacy patient care programs, and vaccination administration.
CVS (NYSE:CVS) is running on solid fundamentals. It generated over $91 billion in total revenue and $8 billion in operating cash flow in the first half of 2024. Most of its businesses are performing well, and the company continues executing strategies to drive its integrated value. It serves more than 186 million people, expanding the number of consumers using two or more CVS Health offerings to 57.7 million in the first half of 2024. This translates to an increase of around 2.5 million consumers. The company also increased the number of Aetna medical members using CVS pharmacies to 9 million, an increase of 8% as compared to last year. It now has around 13.8 million Aetna medical members covered by Caremark, showing a 13% increase compared to 2023.
In addition, the company expanded its digital reach with around 60 million unique digital customers leveraging its platform to fill prescriptions, schedule health services appointments, and purchase wellness products, leading to growth and profitability. CVS (NYSE:CVS) is also following a multi-year opportunity to deliver $2 billion in savings, driven by optimizing and streamlining its processes, increasing the use of artificial intelligence and automation across its enterprise, and rationalizing its business portfolio. The company is executing these initiatives in a way that does not compromise consumer needs. Such savings will allow the company to invest in new opportunities and businesses to continue on the path to profitability. It ranks tenth on our list of the 10 cheap retail stocks to buy according to analysts.
Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2024 investor letter:
“American healthcare company, CVS Health Corporation (NYSE:CVS), also declined following disappointing earnings results and a subsequent reduction in full year guidance. The miss was primarily due to increased utilization of Medicare Advantage plans and weakness in the health services segment driven by the loss of a large client and continued pharmacy client price improvements. In response, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage. CVS believes the program can remain an attractive business for Aetna and CVS Health over time and will construct its bid for 2025 as a multi-year repricing opportunity across plan level benefits. Meanwhile, CVS continues to return capital to shareholders through dividends and a recent accelerated share repurchase transaction”.
9. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ)
Forward P/E: 21
Analyst Upside Potential as of September 23, 2024: 9.67%
Number of Hedge Fund Holders as of Q2 2024: 34
Commonly known as BJ’s, BJ’s Wholesale Club Holdings (NYSE:BJ) is a membership-only warehouse club chain primarily concentrated in the eastern United States, spanning Tennessee, Alabama, Michigan, Ohio, Indiana, and others. It offers an elaborate assortment of goods, including produce, fresh foods, a fresh bakery, a fresh deli, household essentials, gas, technology, home decor, seasonal items, apparel, and more. Its merchandise offerings are divided into grocery and general merchandise and service. While grocery covers meta, dairy, produce, bakery, deli, frozen items, packaged foods, beauty products, and the like, general merchandise and services consist of apparel, electronics, small appliances, optical, tires, and more.
BJ’s (NYSE:BJ) also offers specialty services, including full-service optical centers, propane tank filling, tire installation, and more. The company operates around 244 clubs and 175 gas locations across 20 states. It’s operating on a robust profitability model, with revenue in Q2 2024 increasing by 5% compared to 2023 and reaching $5.2 billion. This growth is primarily driven by increased same-store sales, higher membership renewals, and strong performance in digital channels. In addition, the company is increasingly focusing on its value and private-label items, reflected in its earnings.
Looking ahead, BJ’s Wholesale Club Holdings Inc. (NYSE:BJ) has aggressive expansion plans. These include opening new clubs in key markets, are expected to drive additional sales growth and capture a larger share of the warehouse club market. Investments in digital and omnichannel capabilities, such as enhanced online shopping and expanded curbside pickup and delivery options, are likely to attract more customers and boost sales.
One of the primary factors painting an optimistic picture for the company is its continual growth in membership fees, which underwent a 9% growth in Q2 2024. The company also experienced strong membership renewal rates and growth in its premium tier memberships. When coupled with its expanding digital presence, these factors give BJ’s (NYSE:BJ) a prominent competitive edge. 34 hedge funds hold stakes in the company as of Q2 2024.
TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) in its first quarter 2024 investor letter:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) operates membership warehouse clubs. Its shares gained 14% after it reported better-than-expected comparable sales growth, in-line revenues, and earnings for its fiscal fourth quarter. Highlights of the quarter were increased membership and customer traffic.”
8. Macy’s, Inc. (NYSE:M)
Forward P/E: 5.59
Analyst Upside Potential as of September 23, 2024: 11.33%
Number of Hedge Fund Holders as of Q4 2024: 44
Macy’s (NYSE:M) is an omnichannel retail company that operates department stores, websites, and mobile applications under three brands: Macy’s, Bloomingdale’s, and Bluemercury. It sells a wide range of merchandise, including apparel, home furnishing, cosmetics, accessories, and a number of other consumer goods. It operates in 43 states, Puerto Rico, Guam, and the District of Columbia. Macy’s (NYSE:M) has an elaborate portfolio of brands, including Macy’s, Macy’s Backstage, Macy’s small format, Bloomingdale’s, Bloomingdale’s The Outlet, Bluemercury, and Bloomie’s. It also operates in Dubai, United Arab Emirates, and Al Zahra, Kuwait, through a license agreement with Al Tayer Insignia.
Over the past three years, the company’s annual revenue has grown at a CAGR of 2.34%. Total Q2 2024 revenue of $5.10 billion also underwent a 1.15% one-year increase when compared to last year. Macy’s (NYSE:M) is improving its operational structure by closing down stores with inadequate sales and opening small-format stores in their place. It has plans in place to open around 30 new small-format stores through 2025. It is also addressing weaknesses in men’s apparel, home, and handbags.
To work on the opportunity in men’s apparel, the company is launching a new private brand targeting the under 40 consumers to support their growth goals. In addition, it is diversifying its brand portfolio in handbags. Apart from increasing demand for Coach’s new product assortment, Lauren by Ralph Lauren and Karl Lagerfeld are gaining public attention. In the home segment, the company is strengthening its holiday gift-giving assortment and planning a broad private brand reimagination for the coming year.
Macy’s (NYSE:M) is adjusting to changing consumer behavior to mirror its growth mindset by pulling back in areas with soft growth and protecting the ones with momentum. It is evolving its products through close partnerships with vendors and serving its customers better through owned, marketplace, and concession. It is also improving its digital standing, focusing on search engine optimization, site enhancements, transparent pricing, and a better mobile experience.
As of Q2 2024, 44 hedge funds hold stakes in Macy’s (NYSE:M), with Arrowstreet Capital being the most prominent shareholder with 9.5 million shares. The stock takes the eighth spot on our list of the top cheap retail stocks to buy with high analyst upside potential.
7. Dollar General Corporation (NYSE:DG)
Forward P/E: 14.83
Analyst Upside Potential as of September 23, 2024: 12.08%
Number of Hedge Fund Holders as of Q4 2024: 42
Dollar General (NYSE:DG) is a discount store retailer with more than 2,000 stores across Mexico and the US. It offers an array of merchandise in its stores, including home products, consumable items, seasonal items, and apparel. Its offerings include brands from manufacturers along with its private brand selections at discounted prices. Dollar General (NYSE:DG) is continuing the rural expansion of its operations, opening its 20,000th store in February.
The stock fell after it reported its earnings for the second quarter. Its revenue grew by 4% year-over-year to $10.2 billion, but earnings per share fell by 20% to $1.70, below analyst estimates of $1.79. However, Dollar General Corp (NYSE:DG) is here to stay. The company announced that its primary base of consumers were lower-income shoppers, and factors such as rising unemployment, inflation, and interest rates had put them in a worse position than they were six months ago. However, with inflation slowing down, the company is expected to recover.
Dollar General (NYSE:DG) holds a competitive advantage due to its highly discounted deals and prices, especially compared to its competitors, who do not hold such everyday low-price positions. It is continually strengthening its operations by focusing on a timely and accurate supply chain, customer-centric marketing, and in-store execution. It is also working towards its “back-to-basics” progress, enhancing customer experience by increasing employee presence at the front end of its stores and ensuring that its associates provide increased engagement to customers. In addition, the company is working to boost sales growth and improve in-stock levels by focusing labor hours on perpetual inventory management.
It is also closing the less efficient temporary facilities and has opened two new permanent distribution centers in Colorado and Arkansas. These centers are expected to reach the top of their speed in the coming months, significantly contributing to reduced transportation expenses and a reduction in stem miles. Dollar General is also undertaking the first full-scale refresh of its sorting process within its distribution centers. This will allow its store teams to manage shelves more efficiently, stock them quickly, and ensure greater on-shelf availability. All of this is ultimately expected to support ongoing sales growth and boost profitability.
6. Target Corporation (NYSE:TGT)
Forward P/E: 16.34
Analyst Upside Potential as of September 23, 2024: 15.12%
Number of Hedge Fund Holders as of Q2 2024: 52
Target (NYSE:TGT) is a retail giant with over 2,000 discount department stores and hypermarkets across the US and Canada. It serves its customers, referred to as guests, an array of items, including everyday essentials, fashionables, differentiated merchandise at discounted prices, and an array of general merchandise and food. Its merchandise categories span apparel and accessories, food and beverages, home furnishing and decor, and others. Target’s (NYSE:TGT) digital channels also include an elaborate assortment of merchandise and food, including the items sold in its stores and a complementary assortment sold by third parties and the company itself. Its brand portfolio includes Cloud Island, Ava & Viv, A New Day, Favorite Day, and others.
Target (NYSE:TGT) is not just returning to growth but is also exceeding analyst expectations with its operations. Comparable sales in Q2 2024 increased by 2%, driven entirely by traffic. This shows that the company’s multiple guest-focused initiatives are working. Its store and digital channels also saw growth in Q2, further solidifying the company’s presence in the market. Target (NYSE:TGT) already holds a competitive market edge due to its reputation as a retailer. With traffic growth in all six merchandising categories of the Company, customers seem to be coming back to Target (NYSE:TGT). Sales in apparel, one of its key categories, rose by 3%. Its discretionary categories comprise a significant portion of its revenue and are also improving.
As of Q2 2024, Target (NYSE:TGT) is held by 52 hedge funds as of Q2 2024, with Diamond Hill Capital holding the highest stake worth $458.13 million.
Carillon Eagle Growth & Income Fund stated the following regarding Target Corporation (NYSE:TGT) in its Q2 2024 investor letter:
“Target Corporation’s (NYSE:TGT) sales continue to feel the consumer softness in discretionary goods. In addition, while margins are recovering, they are not up to expectations. Encouragingly, sales are sequentially increasing, and comparable sales are expected to get easier as Target enters the back half of the year.”
5. Dollar Tree, Inc. (NASDAQ:DLTR)
Forward P/E: 13.73
Analyst Upside Potential as of September 23, 2024: 15.59%
Number of Hedge Fund Holders as of Q2 2024: 38
Dollar Tree (NASDAQ:DLTR) is a discount variety store retailer based in Virginia. It operates more than 15,000 stores across the country, and is supported by a logistics network spanning 24 distribution centers across the country. The company holds a significant competitive advantage due to its highly discounted prices on an elaborate array of merchandise offered in convenient neighborhood stores. Dollar Tree (NASDAQ:DLTR) is running on a strong, differentiated business model, supported by its long-term strategy of multi-price expansion and store growth acceleration.
To navigate the uncertain economic backdrop, the company is focusing on factors within its control and rolling out key transformation initiatives. Its multi-expansion strategy resonates with its audience, with the 1,600 stores converted into its newest in-line format and seeing a substantial sales lift. Comps for these 1,600 converted stores were up 4.6% in Q2 2024, around 0.5% less than those in other formats in the same quarter.
Dollar Tree (NASDAQ:DLTR) also reopened 85 of the recently acquired former 99 Cents stores in Q2, with plans to open 20 additional stores immediately. The remaining 56 stores are expected to reopen by the end of 2024. Since these 99 Cents Only stores are located in high-quality, proven stores in strong markets, they are expected to boost the company’s profitability and bring great growth potential. Expanding its footprint across the Southwest and California also marks a notable achievement for the company.
Dollar Tree (NASDAQ:DLTR) added 2.8 million new customers to its consumer share over the past 12 months, with the best-performing categories split across discretionary and consumables, including apparel, beverages, health OTC, and personal care. The company is also making considerable progress in its modernization initiatives, with its new warehouse management system going live at its first two DCs. Two more are slated for early 2025. It has transitioned more than 9,000 stores to its network infrastructure, supporting business operations by enhancing in-store Wi-Fi access for associates and improving Internet connectivity. Dollar Tree (NASDAQ:DLTR) takes the fifth spot on our list of the top cheap retail stocks to buy according to analysts.
Here is what Madison Investors Fund stated regarding Dollar Tree, Inc. (NASDAQ:DLTR) in its Q2 2024 investor letter:
“Dollar Tree, Inc. (NASDAQ:DLTR) underperformed following a plethora of concerns: weakness surrounding the low-end consumer, pricing actions by peers, and disappointing sales at the core Dollar Tree banner. In addition, the significant news that management has placed the struggling Family Dollar banner under strategic review was received skeptically by investors. Despite these concerns, we are encouraged by the long-term prospects of the multi-price initiatives at the Dollar Tree banner and are entirely supportive of management’s effort to enhance value by evaluating alternatives for Family Dollar. We also see a comfortable margin of safety in the shares at the current price.”
4. Office Depot (NYSE:ODP)
Forward P/E: 7.84
Analyst Upside Potential as of September 23, 2024: 20.21%
Number of Hedge Fund Holders as of Q2 2024: 26
Office Depot (NYSE:ODP) provides business supplies, services, products, and digital workplace technology solutions to small, medium-sized, and enterprise businesses. Its operations are divided into four segments: ODP Depot Division, ODP Business Solutions Division, Varis Division, and Veyer Division. The Office Depot Division provides retail consumer and small business products and services through an omnichannel platform. The ODP Business Solutions Division sells the company’s privately branded and nationally branded office supplies and adjacency products and services to customers. The Veyer Divison specializes in B2B and consumer business service delivery, with fulfillment, distribution, purchasing, and global sourcing. Office Depot’s Varis Division encompasses a B2B-centric digital commerce platform that offers businesses the procurement controls and visibility required to operate.
The company is expediting several initiatives based on its performance in Q1 2024 to combat the ongoing macroeconomic headwinds it is facing. Such endeavors are positioning the company to drive greater revenue velocity exiting 2024. It is also focusing on strategically transforming its top line growth trajectory in its core business. Office Depot (NYSE:ODP) is driving business transformation, and AI process focus across its entire enterprise to benefit from productivity opportunities to fuel future growth and boost capital allocation opportunities. It also made substantial progress under its Project Core, which was aimed at streamlining its operations and sharpening its core focus.
Office Depot (NYSE:ODP) recently began its five major business process improvement initiatives, known as the Big 5. These initiatives are expected to drive significant growth and profitability in 2025. It is also engaging in partnerships to drive additional traffic to its retail division. Apart from investments in its core operations, the company repurchased a significant amount of shares, amounting to more than $140 million of stick in this quarter. This also includes more than $170 million under the recently announced authorization. The company is continuing to balance its capital allocation strategy, keeping market conditions and business performance in check.
With several initiatives in place, the company is on track to achieve annualized run rate savings of at least $100 million when implemented completely. This will help solidify its position for future growth, giving it a competitive edge. Office Depot (NYSE:ODP) is managing these savings through cost-efficiency measures undertaken across the entire enterprise, including its supply chain, organizational structure, and cost of goods sold savings through further efficiencies.
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.
2. Albertsons Companies Inc (NYSE:ACI)
Forward P/E: 7.85
Analyst Upside Potential as of September 23, 2024: 29.07%
Number of Hedge Fund Holders as of Q2 2024: 59
Albertsons (NYSE:ACI) is a food and drug retailer in the US that specializes in operating retail stores. It sells general merchandise, grocery items, health and beauty care products, fuel, pharmacy, and other items and services through its brick-and-mortar stores and digital channels. It operates around 2.269 stores across 34 stores in the US under 20 banners, including Albertsons, Vons, Randalls, Carrs, Acme, Star Market, Market Street, Kings Food Markets, Haggen, and others.
Albertsons (NYSE:ACI) also operates around 1,725 pharmacies, 402 fuel centers, 1,336 in-store branded coffee shops, 22 dedicated distribution centers, 19 manufacturing facilities, and a number of other digital platforms. Its brand portfolio spans Open Nature, Signature Care, Signature SELECT, Primo Tabglio, Signature Cafe, Signature Reserve, and others.
Albertsons (NYSE:ACI) reported net sales of $24.3 billion in Q1 2024, experiencing a slight increase from $24.1 billion in the previous year. This was driven by a 1.4% increase in identical sales. The company is making substantial progress in its online presence, with digital sales growing by 23%.
In addition, Albertsons (NYSE:ACI) is improving its financials and liquidity, with cash growing to $291.1 million and decreasing debt. It also invested $543 million in CAPEX, opening a new location and remodeling 17 store locations in the process. Q1 2024 also saw increased investment in the company’s Customers for Life strategy and the omnichannel and digital capabilities to support it. The Customer for Life strategy places customers at the center of all its operations, driving growth in loyalty members by launching its simplified “for U” loyalty program.
In the second quarter of 2024, 59 hedge funds had stakes in Albertsons Companies, Inc. (NYSE:ACI). As of Q2 2024, Stephen Feinberg’s Cerberus Capital Management is the top shareholder in the company and has a position worth $3 billion.
1. Bath & Body Works (NYSE:BBWI)
Forward P/E: 9.4
Analyst Upside Potential as of September 23, 2024: 41.50%
Number of Hedge Fund Holders as of Q2 2024: 55
Bath & Body Works (NYSE:BBWI) is an omnichannel retailer specializing in personal care and home fragrance. It sells merchandise through its retail stores in the US and Canada, its websites, and other channels under a portfolio of brand names, including Bath & Body Works, White Barn, and others. It also operates an international business network managed through its license, franchise, and wholesale partners.
Bath & Body Works (NYSE:BBWI) specializes in various home fragrances and care, including body lotion and body cream, fine fragrance mist, home fragrance diffusers, 3-wick candles, and liquid hand soap. It holds a competitive market advantage due to its accessible prices, unique combination of fragrances, and packaging. The company operates in a network of around 1,850 company-operated stores and e-commerce sites in Canada and the US. In addition, it also manages more than 500 stores and 28 e-commerce sites in more than 40 countries operating under license, wholesale, and franchise arrangements.
Although Bath & Body Works (NYSE:BBWI) functions amid a challenging landscape of value-driven consumers and economic uncertainty, it is undertaking actions to drive growth in its core portfolio. It is also expanding into new adjacency end markets, using its agile model to adapt to a dynamic environment, expanding margins, and cutting costs to optimize business.
In Q2 2024, it continued its investments to strengthen its operating foundation and built a platform with an emphasis on five key growth strategies: engaging with customers, expanding its reach, improving operational efficiency and excellence, elevating the Bath & Body Works (NYSE:BBWI) products and brand, and enabling a seamless omnichannel experience.
It is making solid progress across these elements, innovating its portfolio and leveraging speed to continuously improve its products’ ingredients, quality, efficacy, packaging, and fragrances.
The company is also making significant investments in its product and marketing category in an attempt to strengthen brand loyalty and category leadership. Its wide array of price points gives it a market advantage, selling items ranging from $2 PocketBac to $60 Eau de Parfum. It also offers a breadth of product points within categories, extending its reach.
Overall, BBWI ranks first among the 11 cheap retail stocks to buy according to analysts. While we acknowledge the potential of retail companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BBWI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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