In this article we discuss the 5 best retail stocks for 2021. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Retail Stocks for 2021.
5. Target Corporation (NYSE: TGT)
Number of Hedge Fund Holders: 60
Target Corporation (NYSE: TGT) is a general merchandise retailer in the US. The company offers food assortments, dry grocery, dairy, apparel, home décor, electronics, toys, and a range of other products. It ranks 5th on our list of the best retails stocks for 2021.
On June 8th, UBS upgraded Target Corporation (NYSE: TGT) to a Buy after witnessing structural improvements in the company. The price target was hiked to $265 from $210. In the first quarter of 2021, the company’s EPS was valued at $0.59, beating estimates by $0.19. Its revenue came in at $19.61 billion, representing an 11.28% growth year over year and beating estimates by $576.64 million. Target Corporation (NYSE: TGT) has a gross profit margin of 30.1% and has gained 35.89% in the past 6 months and 33.81% year to date.
By the end of the first quarter of 2021, 60 hedge funds out of the 866 tracked by Insider Monkey held stakes in Target Corporation (NYSE: TGT), worth roughly $4.76 billion. This is compared to the previous quarter’s 78 hedge fund holders with a total stake value of roughly $4.06 billion.
LRT Capital Management, an investment management firm, mentioned Target Corporation (NYSE: TGT) in their first quarter 2021 investor letter. Here’s what they said:
“Target, the Minneapolis-based retailer, continues to fire on all cylinders as the company has reported two quarters in a row of +20% revenue growth (5% traffic growth + 15% average basket size6 ), coupled with the strongest EBITDA margins in over four years. The company has successfully navigated the Covid-19 pandemic with online sales growing by 155% and 118% during Q3 2020 and Q4, respectively.
On March 2nd, the company reported another stellar quarter, with same-store sales growing by over 20%, and both earnings (+57% YoY) and revenues (+21% YoY) beating estimates. The shares are up 14.11% year-to-date. We believe the shares are a bargain 23x trailing and 20x forward earnings.”
4. Lowe’s Companies, Inc. (NYSE: LOW)
Number of Hedge Fund Holders: 61
Lowe’s Companies, Inc. (NYSE: LOW) is a home improvement retailer operating in the US and internationally. Its products include construction, maintenance, repair, modeling, and decorating tools. The company ranks 4th on our list of the best retail stocks for 2021.
On June 22nd, Wells Fargo stated that Lowe’s Companies, Inc. (NYSE: LOW) witnessed high summer demand, making the company stand out during the channel checks. In the first quarter of 2021, the company’s EPS was valued at $1.77, beating estimates by $0.45. Its revenue was valued at $19.68 billion, representing a 10.9% growth year over year and beating estimates by $1.35 billion. Lowe’s Companies, Inc. (NYSE: LOW) has a gross profit margin of 33.07% and has gained 17.88% in the past 6 months and 19.39% year to date.
By the end of the first quarter of 2021, 61 hedge funds out of the 866 tracked by Insider Monkey held stakes in Lowe’s Companies, Inc. (NYSE: LOW), worth roughly $5.17 billion. This is compared to the previous quarter’s 71 hedge fund holders with a total stake value of roughly $5.19 million.
Pershing Square Holdings Ltd, an investment management firm, mentioned Lowe’s Companies, Inc. (NYSE: LOW) in their fourth-quarter 2020 investor letter. Here’s what they said:
“Lowe’s is a high-quality business with significant long-term earnings growth potential. We initiated our investment in the company in April 2018 largely because we believed that the hiring of a new high-caliber management team could dramatically improve the business and close the performance gap to its closest competitor, Home Depot. Marvin Ellison became CEO in July 2018, and immediately began working on a multi-year transformation plan to bolster Lowe’s retail fundamentals, reduce structural costs, expand distribution capabilities, and modernize systems and the company’s online capabilities.
In 2020, Lowe’s experienced unprecedented demand driven by consumers nesting at home, higher home asset utilization and a reallocation of discretionary spend. Lowe’s earlier decision to modernize the company’s online offering allowed it to meet consumers’ surging demand. Further, its commitment to improve the company’s retail fundamentals allowed Lowe’s to showcase its enhanced merchandising, greater in-stock-levels, and excellent customer service. In the fourth quarter, the company completed 95% of its store layout resets which include a more intuitive shopping experience complete with a more Pro-centric layout (by “Pro” we refer to the professional tradesmen that perform repair and maintenance, remodeling and construction services). The company is also rolling out a new Pro CRM tool, which should improve Lowe’s Pro market share.
Management remains focused on a myriad of operational initiatives designed to improve the customer shopping experience and the company’s long-term earnings power. In the near-to-medium-term, these initiatives include improving Lowe’s omnichannel capabilities including simplifying search and checkout features, launching three additional ecommerce fulfillment centers, enabling faster mobile order fulfillment, standing up dedicated store fulfillment teams, rolling out touchless Buy-Online-Pick-Up-In-Store lockers to all U.S. stores by April 2021, and reimagining scheduling and modes of delivery for certain large-format order deliveries (notably, appliances). These initiatives are examples of Lowe’s “Perpetual Productivity Improvement” program which is designed to improve market share and profit margins.
Lowe’s is making important strategic investments to position the business to continue to thrive. The company’s long-term outlook implies significant opportunity for continued earnings appreciation and margin expansion as it executes its multiyear business transformation.”
3. The TJX Companies, Inc. (NYSE: TJX)
Number of Hedge Fund Holders: 63
The TJX Companies, Inc. (NYSE: TJX) is an off-price apparel and home fashions retailer with four segments, namely Marmaxx, HomeGoods, TJX Canada, and TJX International. The company ranks 3rd on our list of the best retail stocks for 2021.
This May, The TJX Companies, Inc. (NYSE: TJX) declared a $0.26 per share quarterly dividend with a forward yield of 1.55%. The new dividend will be payable on September 2nd. In the first quarter of 2021, its EPS was valued at -$0.74, and its revenue came in at $4.41 billion. The TJX Companies, Inc. (NYSE: TJX) has a gross profit margin of 35.29% and has gained 23.96% in the past year.
By the end of the first quarter of 2021, 63 hedge funds out of the 866 tracked by Insider Monkey held stakes in The TJX Companies, Inc. (NYSE: TJX), worth roughly $2.34 billion. This is compared to the previous quarter’s 68 hedge fund holders with a total stake value of roughly $2.29 billion.
ClearBridge Investments, an investment management firm, mentioned The TJX Companies, Inc. (NYSE: TJX) in their first quarter 2021 investor letter. Here’s what they said:
“New positions that should thrive in a reopening of the economy and a financially healthy consumer eager to spend include: TJX, an off-brand retailer with a strong presence in the U.S. and Europe that should continue to benefit from the demise of traditional retailers, particularly as consumer spending resumes.”
2. The Home Depot, Inc. (NYSE: HD)
Number of Hedge Fund Holders: 68
The Home Depot, Inc. (NYSE: HD) is a home improvement retailer operating the Home Depot stores selling building materials, home improvement products, lawn and garden products, and décor products, among other services. The company ranks 2nd on our list of the best retail stocks for 2021
As of the 21st of June, The Home Depot, Inc. (NYSE: HD) is among the top consumer stock picks for J.P. Morgan as well. In the first quarter of 2021, the company’s EPS was valued at $2.08, and its revenue came in at $28.26 billion, representing year-over-year growth of 7.12% and beating estimates by $685.97 million. The Home Depot, Inc. (NYSE: HD) has a gross profit margin of 33.94% and has gained 15.65% in the past 6 months and 18.23% year to date.
By the end of the first quarter of 2021, 68 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Home Depot, Inc. (NYSE: HD), worth roughly $4.35 billion. This is compared to the previous quarter’s 79 hedge fund holders with a total stake value of roughly $4.92 billion.
Ensemble Capital, an investment management firm, mentioned The Home Depot, Inc. (NYSE: HD) in their first quarter 2021 investor letter. Here’s what they said:
“Notable contributors to the Fund’s returns this quarter (included) Home Depot. Home Depot (8.9% weight in the Fund) continued to benefit from a red-hot housing and home improvement market, delivering record financial performance in 2020. As a high return on invested capital business, any step-up in growth results in considerable shareholder value creation. While 2021 comparable sales may not yield impressive headline results, we believe there are several secular tailwinds supporting continued housing investment, including millennials entering prime household formation/peak earnings years, relatively low interest rates, and government policies.
Home Depot (8.9% weight in the Fund): The big orange sign of Home Depot is a familiar sight for homeowners across the country. Despite the rise of Amazon, Home Depot has generated outstanding results for shareholders during the rise of eCommerce, even as Home Depot’s end market in housing suffered the worst collapse in a century. Over the last fifteen years, a period which began at the peak of the housing bubble, Home Depot’s stock has generated annual returns of 17% a year, outperforming the S&P 500 by approximately 7% a year.” (Click here to view the complete text)
1. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ: AMZN) is a retail giant engaged in selling consumer products and subscriptions in North America and internationally. The company ranks 1st on our list of the best retail stocks for 2021.
On June 22nd, the Wall Street Journal reported that Amazon.com, Inc.’s (NASDAQ: AMZN)’s acquisition of MGM would be reviewed by the FTC. The acquisition will be worth $8.45 billion if it goes through and will bring more content under Amazon’s wing, including the James Bond franchise, according to WSJ. In the first quarter of 2021, the company’s EPS was valued at $15.79 versus estimates of $9.64, and its revenue came in at $108.52 billion, representing a 43.82% growth year over year. Amazon.com, Inc. (NASDAQ: AMZN) has a gross profit margin of 40.48% and has gained 9.87% in the past 6 months and 9.82% year to date as well.
By the end of the first quarter of 2021, 243 hedge funds out of the 866 tracked by Insider Monkey held stakes in Amazon.com, Inc. (NASDAQ: AMZN), worth roughly $50.4 billion. This is compared to the previous quarter’s 273 hedge fund holders with a total stake value of roughly $51.5 billion.
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