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With so many challenges for traditional retailers, investors can be forgiven for giving up on the entire sector. But there is money to be made if you focus on innovative sellers and maybe even on traditional brick-and-mortar retailers that are cleaning up their acts.
Below are two lists of stocks of retailers, broadly defined by FactSet to include specialized companies such as Vroom Inc.
VRM
and Carvana Co.
CVNA,
which sell (and buy) used cars online. The first list includes 15 stocks that analysts expect to rise the most over the next year, and the second list shows companies expected to increase their sales the most over the next two years.
Two retailers that didn’t make either list are Macy’s Inc.
M
and Target Corp.
TGT.
Both are worth watching, although investors with shorter-term horizons may find them pricey.
Shares of Macy’s had nearly doubled for 2021 through last week. The stock popped 20% on Aug. 19, after the company reported a 61% increase in comparable-store quarterly sales from a year earlier, established a quarterly dividend and announced an expanded partnership with WHP Global to sell more Toys ‘R’ Us items in its stores. The stock closed at $22.39 on Aug. 20 — a penny above the consensus 12-month price target among analysts polled by FactSet. Of course, analysts can change their estimates in light of recent news.
Target’s stock is up 49% this year. The company also reported a much-improved second quarter and expanded its partnership with Walt Disney Co.
DIS.
Target’s shares closed at $253.40 on Aug. 20, 10% below the consensus price target of $277.66.
Analysts’ favorite retail stocks
Starting with the Russell 3000 Index
RUA,
there are 124 stocks of companies in retail industries, according to FactSet’s industry group descriptions. These include online retailers such as Amazon.com Inc.
AMZN
and the direct used-auto retailers mentioned above.
Among those stocks, 77 have stock-market values of at least $1 billion, are covered by at least five analysts polled by FactSet and have consensus sales and earnings estimates available through 2023.
Here are the 15 stocks with majority “buy” or equivalent ratings that the analysts believe have the most upside potential over the next year:
| Company | Share “buy” ratings | Closing price – Aug. 20 | Consensus price target | Implied 12-month upside potential |
|
Vroom Inc. VRM |
67% | $25.02 | $49.25 | 97% |
|
RealReal Inc. REAL |
67% | $12.35 | $24.31 | 97% |
|
Overstock.com Inc. OSTK |
100% | $69.58 | $127.60 | 83% |
|
ChargePoint Holdings Inc. Class A CHPT |
88% | $21.26 | $36.00 | 69% |
|
Group 1 Automotive Inc. GPI |
67% | $159.01 | $251.40 | 58% |
|
Leslie’s Inc. LESL |
75% | $22.59 | $32.64 | 44% |
|
Lithia Motors Inc. LAD |
64% | $328.51 | $468.83 | 43% |
|
IAA Inc. IAA |
90% | $51.71 | $72.38 | 40% |
|
Abercrombie & Fitch Co. Class A ANF |
58% | $38.02 | $52.11 | 37% |
|
Tapestry Inc. TPR |
62% | $40.58 | $54.89 | 35% |
|
Capri Holdings Ltd. CPRI |
61% | $54.33 | $72.35 | 33% |
|
Sonic Automotive Inc. Class A SAH |
56% | $50.25 | $65.71 | 31% |
|
Amazon.com Inc. AMZN |
98% | $3,199.95 | $4,164.30 | 30% |
|
Hibbett Inc. HIBB |
83% | $85.14 | $110.67 | 30% |
|
American Eagle Outfitters Inc. AEO |
64% | $32.37 | $41.31 | 28% |
| Source: FactSet | ||||
You can click on the tickers for more about each company, including business profiles, news coverage and price ratios.
Using the same order, here are sales estimates for the group through 2023:
| Company | Expected two-year sales increase | Estimated revenue – 2021 | Estimated revenue – 2022 | Estimated revenue – 2023 |
|
Vroom Inc. VRM |
117% | $3,060 | $4,514 | $6,652 |
|
RealReal Inc. REAL |
65% | $447 | $592 | $736 |
|
Overstock.com Inc. OSTK |
17% | $2,830 | $3,186 | $3,321 |
|
ChargePoint Holdings Inc. Class A CHPT |
175% | $200 | $328 | $550 |
|
Group 1 Automotive Inc. GPI |
11% | $13,480 | $14,680 | $15,025 |
|
Leslie’s Inc. LESL |
14% | $1,342 | $1,442 | $1,536 |
|
Lithia Motors Inc. LAD |
41% | $21,902 | $26,515 | $30,801 |
|
IAA Inc. IAA |
15% | $1,706 | $1,781 | $1,962 |
|
Abercrombie & Fitch Co. Class A ANF |
4% | $3,680 | $3,847 | $3,841 |
|
Tapestry Inc. TPR |
11% | $6,066 | $6,531 | $6,725 |
|
Capri Holdings Ltd. CPRI |
24% | $5,017 | $5,752 | $6,205 |
|
Sonic Automotive Inc. Class A SAH |
34% | $12,390 | $14,196 | $16,569 |
|
Amazon.com Inc. AMZN |
38% | $476,170 | $563,466 | $657,295 |
|
Hibbett Inc. HIBB |
13% | $1,504 | $1,581 | $1,706 |
|
American Eagle Outfitters Inc. AEO |
17% | $4,917 | $5,355 | $5,742 |
| Source: FactSet | ||||
The estimates are for calendar years, but note that many retailers’ fiscal years don’t match the calendar.
Also using the same list, here are estimates for earnings per share through 2023:
| Company | Expected two-year EPS change | Estimated EPS – 2021 | Estimated EPS – 2022 | Estimated EPS – 2023 |
|
Vroom Inc. VRM |
N/A | -$2.50 | -$2.45 | -$2.24 |
|
RealReal Inc. REAL |
N/A | -$2.05 | -$1.35 | -$1.00 |
|
Overstock.com Inc. OSTK |
-4% | $2.56 | $2.73 | $2.46 |
|
ChargePoint Holdings Inc. Class A CHPT |
N/A | -$1.23 | -$0.42 | -$0.23 |
|
Group 1 Automotive Inc. GPI |
-19% | $30.30 | $28.09 | $24.61 |
|
Leslie’s Inc. LESL |
16% | $0.85 | $0.90 | $0.98 |
|
Lithia Motors Inc. LAD |
-2% | $33.22 | $31.61 | $32.59 |
|
IAA Inc. IAA |
19% | $2.33 | $2.44 | $2.76 |
|
Abercrombie & Fitch Co. Class A ANF |
-10% | $3.16 | $3.18 | $2.85 |
|
Tapestry Inc. TPR |
22% | $3.17 | $3.55 | $3.85 |
|
Capri Holdings Ltd. CPRI |
53% | $3.93 | $5.17 | $5.99 |
|
Sonic Automotive Inc. Class A SAH |
7% | $7.03 | $7.37 | $7.52 |
|
Amazon.com Inc. AMZN |
74% | $53.15 | $67.39 | $92.34 |
|
Hibbett Inc. HIBB |
13% | $8.89 | $8.88 | $10.04 |
|
American Eagle Outfitters Inc. AEO |
34% | $1.97 | $2.33 | $2.63 |
| Source: FactSet | ||||
For three of the companies, the expected two-year change in EPS is “N/A” because estimated earnings for 2021 or 2023, or both, are negative.
Fastest expected sales increases
Starting again with the 77 retailers that have market capitalizations of at least $1 billion and are covered by at least five analysts polled by FactSet, here are the 15 expected to increase their sales the most over the next two years:
| Company | Expected two-year sales increase | Estimated revenue – 2021 | Estimated revenue – 2022 | Estimated revenue – 2023 |
|
ChargePoint Holdings Inc. Class A CHPT |
175% | $200 | $328 | $550 |
|
Vroom Inc. VRM |
117% | $3,060 | $4,514 | $6,652 |
|
Carvana Co. Class A CVNA |
76% | $11,775 | $15,468 | $20,680 |
|
RealReal Inc. REAL |
65% | $447 | $592 | $736 |
|
Revolve Group, Inc Class A RVLV |
47% | $818 | $1,004 | $1,206 |
|
Etsy Inc. ETSY |
47% | $2,280 | $2,747 | $3,351 |
|
Floor & Decor Holdings Inc. Class A FND |
46% | $3,339 | $4,007 | $4,874 |
|
Five Below Inc. FIVE |
41% | $2,717 | $3,264 | $3,841 |
|
Stitch Fix Inc. Class A SFIX |
41% | $2,240 | $2,622 | $3,161 |
|
Lithia Motors Inc. LAD |
41% | $21,902 | $26,515 | $30,801 |
|
Wayfair Inc. Class A W |
39% | $14,393 | $17,228 | $20,049 |
|
Amazon.com Inc. AMZN |
38% | $476,170 | $563,466 | $657,295 |
|
Lululemon Athletica Inc. LULU |
37% | $5,804 | $6,877 | $7,963 |
|
Sonic Automotive Inc. Class A SAH |
34% | $12,390 | $14,196 | $16,569 |
|
Ollie’s Bargain Outlet Holdings Inc. OLLI |
26% | $1,868 | $2,088 | $2,363 |
| Source: FacSet | ||||
Only five companies make both this list and that with the most implied upside potential for their stock price: ChargePoint Holdings Inc.
CHPT,
Vroom, RealReal Inc.
REAL,
Lithia Motors Inc.
LAD,
Amazon and Sonic Automotive Inc.
SAH.
Here are EPS estimates for the list of best expected sales growers, using the same order as those with the fastest expected sales growth:
| Company | Expected two-year earnings increase | Estimated EPS – 2021 | Estimated EPS – 2022 | Estimated EPS – 2023 |
|
ChargePoint Holdings Inc. Class A CHPT |
N/A | -$1.23 | -$0.42 | -$0.23 |
|
Vroom Inc. VRM |
N/A | -$2.50 | -$2.45 | -$2.24 |
|
Carvana Co. Class A CVNA |
N/A | -$1.12 | -$0.30 | $1.70 |
|
RealReal Inc. REAL |
N/A | -$2.05 | -$1.35 | -$1.00 |
|
Revolve Group, Inc Class A RVLV |
46% | $1.02 | $1.19 | $1.49 |
|
Etsy Inc. ETSY |
62% | $3.03 | $3.52 | $4.90 |
|
Floor & Decor Holdings Inc. Class A FND |
45% | $2.46 | $2.88 | $3.56 |
|
Five Below Inc. FIVE |
45% | $4.57 | $5.60 | $6.64 |
|
Stitch Fix Inc. Class A SFIX |
N/A | -$0.42 | -$0.24 | $0.43 |
|
Lithia Motors Inc. LAD |
-2% | $33.22 | $31.61 | $32.59 |
|
Wayfair Inc. Class A W |
113% | $3.27 | $4.74 | $6.97 |
|
Amazon.com Inc. AMZN |
74% | $53.15 | $67.39 | $92.34 |
|
Lululemon Athletica Inc. LULU |
50% | $6.73 | $8.33 | $10.08 |
|
Sonic Automotive Inc. Class A SAH |
7% | $7.03 | $7.37 | $7.52 |
|
Ollie’s Bargain Outlet Holdings Inc. OLLI |
23% | $2.93 | $3.24 | $3.61 |
| Source: FactSet | ||||
Here’s a summary of analysts’ opinion about the list of best expected sales growers, also in the same order:
| Company | Share “buy” ratings | Closing price – Aug. 20 | Consensus price target | Implied 12-month upside potential |
|
ChargePoint Holdings Inc. Class A CHPT |
88% | $21.26 | $36.00 | 69% |
|
Vroom Inc. VRM |
67% | $25.02 | $49.25 | 97% |
|
Carvana Co. Class A CVNA |
58% | $349.76 | $379.09 | 8% |
|
RealReal Inc. REAL |
67% | $12.35 | $24.31 | 97% |
|
Revolve Group, Inc Class A RVLV |
71% | $57.68 | $70.67 | 23% |
|
Etsy Inc. ETSY |
76% | $199.27 | $215.93 | 8% |
|
Floor & Decor Holdings Inc. Class A FND |
87% | $117.75 | $136.36 | 16% |
|
Five Below Inc. FIVE |
67% | $225.11 | $232.70 | 3% |
|
Stitch Fix Inc. Class A SFIX |
38% | $39.71 | $62.13 | 56% |
|
Lithia Motors Inc. LAD |
64% | $328.51 | $468.83 | 43% |
|
Wayfair Inc. Class A W |
50% | $290.52 | $324.64 | 12% |
|
Amazon.com Inc. AMZN |
98% | $3,199.95 | $4,164.30 | 30% |
|
Lululemon Athletica Inc. LULU |
67% | $397.83 | $401.63 | 1% |
|
Sonic Automotive Inc. Class A SAH |
56% | $50.25 | $65.71 | 31% |
|
Ollie’s Bargain Outlet Holdings Inc. OLLI |
50% | $82.70 | $98.00 | 19% |
| Source: FactSet | ||||
If you see any stocks of interest here, you should do your own research and form your own opinion about the companies’ long-term strategies before considering an investment.
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