In this article, we discuss the 5 best retail stocks to buy now. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Retail Stocks To Buy Now.
05. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 53
Total Value of Hedge Fund Holdings: $4,986 Million
Number five on our list is the world’s second largest home improvement retailer Lowe’s Companies, Inc. (NYSE:LOW). From 2018 to 2020, Lowe’s Companies, Inc. (NYSE:LOW) worked to strengthen the foundation of its operations. Today, its attention is on expanding its market share. The macro environment has become more unpredictable due to rising inflation and the hawkish stance of the Federal Reserve, however, the long-term forecast for the home improvement industry is still favourable. The technicals and valuations for Lowe’s Companies, Inc. (NYSE:LOW) appear more favourable at the current price levels.
On August 17, following the Q2 results, Baird analyst Peter Benedict increased his price target for Lowe’s to $235 from $225 and maintained an outperform rating on the shares.
By the end of the second quarter of 2022, 53 hedge funds out of the 895 tracked by Insider Monkey held stakes in Lowe’s Companies, Inc. (NYSE:LOW), worth roughly $4,986 million. This is compared to the previous quarter’s 65 hedge fund holders with a total stake value of roughly $5,511 million.
04. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 64
Total Value of Hedge Fund Holdings: $4,765 Million
Costco Wholesale Corporation (NYSE: COST) is the world’s third largest retailer offering low prices and bulk discounts through its members-only warehouses.
By the end of the second quarter of 2022, 64 hedge funds out of the 895 tracked by Insider Monkey held stakes in Costco Wholesale Corporation (NYSE: COST), worth roughly $4,765 million. This is compared to the previous quarter’s 61 hedge fund holders with a total stake value of roughly $5,418 million.
ClearBridge Investments Sustainability Leaders Strategy, in its Q4 2021 investor letter, mentioned Costco Wholesale Corporation (NASDAQ:COST) and discussed its stance on the firm. Here is what the Fund said:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
03. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Total Value of Hedge Fund Holdings: $3,785 Million
Walmart Inc. (NYSE:WMT) manages retail, wholesale, and other businesses globally. The business is divided into three divisions: Sam’s Club, Walmart U.S., and Walmart International. The business provides grocery and consumables as well as health and wellness products. Under 46 banners, it runs around 10,500 stores and different e-commerce websites in 24 countries. In February 2018, the business changed its name from Wal-Mart Stores, Inc. to Walmart Inc. The business is headquartered in Bentonville, Arkansas, and was established in 1945.
By the end of the second quarter of 2022, 67 hedge funds out of the 895 tracked by Insider Monkey held stakes in Walmart Inc. (NYSE:WMT), worth roughly $3,785 million. This is compared to the previous quarter’s 60 hedge fund holders with a total stake value of roughly $6,564 million.
02. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 80
Total Value of Hedge Fund Holdings: $5,354 Million
Number two on our list of ten best retail stocks to buy now is Home Depot, Inc. (NYSE:HD). The stock posted solid Q2 results beating EPS estimate by $0.12 and revenue estimate by $459.47 million. The Home Depot, Inc. (NYSE:HD) price target was increased by Truist analyst Scot Ciccarelli from $375 to $399, on August 17, while maintaining a Buy recommendation for the stock.
By the end of the second quarter of 2022, 80 hedge funds out of the 895 tracked by Insider Monkey held stakes in Home Depot, Inc. (NYSE:HD), worth roughly $5,354 million. This is compared to the previous quarter’s 75 hedge fund holders with a total stake value of roughly $5,591 million.
01. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Total Value of Hedge Fund Holdings: $30,078 Million
Topping the list of top retail stocks to buy according to hedge funds is Amazon.com Inc. (NASDAQ: AMZN). During the second quarter of 2022, the company’s sales revenue rose 7% to $121.2 billion from $113.1 billion in the corresponding quarter of 2021. This was higher than the $119.3 billion prediction made by Wall Street. For the quarter, the company expected revenue of between $116 billion and $121 billion.
Following the release of the most recent Q2 earnings report, Amazon shares surged, demonstrating that the AWS market is still expanding quickly. Additionally, the advertising sector experienced double-digit increase. In the previous month, Amazon announced the purchases of One Medical and iRobot. Even at 25.8x cash flows, the valuation is still favourable, especially given the anticipated growth over the coming few years. Additionally, Amazon has begun stock repurchases, spending $6 billion in the first half of 2022 and this trend of buybacks may continue to increase.
By the end of the second quarter of 2022, 252 hedge funds out of the 895 tracked by Insider Monkey held stakes in Amazon.com Inc. (NASDAQ: AMZN), worth roughly $30,078 million. This is compared to the previous quarter’s 271 hedge fund holders with a total stake value of roughly $48,028 million.
Oakmark Funds, an investment management firm, mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter of 2022 investor letter. Here’s what they said:
“Amazon (NASDAQ:AMZN) is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
For more of the latest stock picks worth considering for your portfolio, check out These 10 Stocks are Gaining After Announcing Share Buybacks and 10 Stocks to Buy According to Francis Chou’s Chou Associates Management.
