7 Best Department Store and Discount Retailer Stocks to Buy

4. Macy’s, Inc. (NYSE:M)

Number of Hedge Fund Holders: 44

Macy’s (NYSE:M) is an omni-channel American retail company that operates department stores such as accessories and apparel for adults and children across the globe. It also operates prominent retail brands such as Bloomingdale’s and Bluemercury, which have been the primary drivers of the company’s growth.

Macy’s (NYSE:M) stock price plummeted after acquisition plans by potential suitors Brigade Capital, an investment management firm, and Arkhouse Management, a real estate investing organization, fell through. Despite the stumble, Macy’s (NYSE:M) is working to maximize profitability by closing down stores across the US with inadequate sales and opening small-format stores in their place. The company plans to open around 30 new small-format stores through 2025.

In the recent quarter, Macy’s (NYSE:M) experienced strength in fragrances and women’s ready-to-wear apparel, including the Steve Madden, Donna Karan, Avec Les Filles, and French Connection brands. High-quality fashion and increased consumer engagement also lead to high public interest in the ongoing private brand ready-wear re-imagination.

The company is also targeting weaknesses in men’s apparel, home, and handbags. In men’s apparel, it is focusing its attention on the contemporary, which it claims to be in a bright spot for growth. Macy’s (NYSE:M) also launched a new private brand that specifically targets customers under 40 in an attempt to elevate consumer engagement. It is also introducing diversity in its handbags collection to grow its portfolio.

Over the past three years, the company’s annual revenue has grown at a CAGR 2.34%. Total Q2 2024 revenue of $5.10 billion also underwent a 1.15% one-year increase when compared to last year. The stock is currently trading at a P/E ratio of 5.68 at a 64% discount to its sector. Macy’s (NYSE:M) median price target of $15.57 presents a 9.18% upside from current levels. 44 hedge funds hold stakes in Macy’s (NYSE:M) as of Q2 2024, with Arrowstreet Capital being the most prominent shareholder with 9.5 million shares. It ranks fourth on our list of the 7 best department store and discount retailers stocks to buy.