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The retail industry provides a variety of finished goods, both durable and non-durable, to individual consumers and households. The industry also sells services. Products sold by retail companies include apparel, electronics, furniture, kitchenware, sporting goods, books, and toys. Some even sell groceries, pharmaceutical products, auto parts, and gardening supplies.
The industry includes traditional brick-and-mortar retailers as well as emerging ecommerce companies. Some of the biggest retail companies include Walmart Inc., Amazon.com Inc., and Costco Wholesale Corp.
Retail sales in the U.S. increased 3.8% in January, the largest rise since March 2021, despite accelerating inflation and weakening consumer sentiment. Spending was supported by huge savings built up during the COVID-19 pandemic and a tightening labor market. The Federal Reserve is expected to raise interest rates several times this year to slow the economy and slow the pace of inflation.
Retail stocks, as represented by an exchange-traded fund—the SPDR S&P Retail ETF (XRT)—have underperformed the broader market. XRT has provided a total return of -13.5% over the past 12 months, below the Russell 1000’s total return of 8.2%.
Here are the top three retail stocks with the best value, the fastest growth, and the most momentum. The market performance numbers above and all statistics in the tables below are as of March 8, 2022.
These are the retail stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
| Best Value Retail Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| eBay Inc. (EBAY) | 53.31 | 31.3 | 2.6 |
| Foot Locker Inc. (FL) | 29.95 | 2.9 | 3.5 |
| Big 5 Sporting Goods Corp. (BGFV) | 16.42 | 0.4 | 3.6 |
Source: YCharts
- eBay Inc.: eBay is an e-commerce company that operates an online marketplace connecting buyers and sellers of new and used items around the world. eBay has about 1.5 billion live listings globally, 19 million sellers, and 152 million active buyers. For its fiscal year 2021, ended Dec. 31, 2021, eBay reported 12% growth in net income as net revenues climbed by 17%. Revenue growth was driven by the company’s managed payments migration, the expansion of its advertising portfolio, and volume growth in eBay’s focus categories.
- Foot Locker Inc.: Foot Locker is an American footwear and sportswear retailer. The company has approximately 2,900 retail stores in 28 countries across North America, Europe, Asia, Australia, and New Zealand. On Feb. 25, the company announced that its board of directors had declared a quarterly cash dividend of $0.40 per share, a 33% increase from the prior $0.30 per share. The Board also authorized a new program to buy back $1.2 billion worth of the company’s outstanding stock.
- Big 5 Sporting Goods Corp.: Big 5 Sporting Goods is a holding company that engages in the retail of sporting goods. The company’s portfolio of offerings includes athletic apparel, shoes, accessories, as well as a wide selection of athletic equipment for fitness, team sports, hunting, camping, fishing, golf, tennis, and winter and summer sports.
These are the top retail stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Sales and earnings are both critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
| Fastest-Growing Retail Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Vroom Inc. (VRM) | 2.73 | 0.4 | N/A (see company description) | 130.3 |
| ChargePoint Holdings Inc. (CHPT) | 16.57 | 5.5 | N/A (see company description) | 121.8 |
| Carvana Co. (CVNA) | 105.20 | 9.5 | N/A (see company description) | 105.4 |
Source: YCharts
- Vroom Inc.: Vroom Inc. operates an e-commerce platform for buying and selling used vehicles as well as spare parts, accessories, and repair. The company reported record unit sales and revenues for FY 2021, ended Dec. 31, 2021, as e-commerce gross profit per unit rose 171% YoY. The company reported negative EPS for that quarter, which is why an EPS growth rate could not be calculated for the above table.
- ChargePoint Holdings Inc.: ChargePoint is an electric vehicle charging network provider that designs, develops, and markets EV charging system infrastructure. It also runs cloud services to help customers locate, reserve, and transact at EV charging stations. The company reported negative EPS in the most recent quarter, which is why an EPS growth rate could not be calculated for the above table.
- Carvana Co.: Carvana is a holding company and online used car retailer. Its e-commerce platform lets customers shop from an inventory of 70,000 vehicles, finance, trade-in, or sell their current vehicle. On March 9, Carvana opened its 31st car vending machine, an eight-story, 27 vehicle-capacity brick and glass structure, in Escondido, California. The company reported negative EPS in the most recent quarter, which is why an EPS growth rate could not be calculated for the above table.
These are the retail stocks that had the highest total return over the last 12 months.
| Retail Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Dillard’s Inc. (DDS) | 265.76 | 5.8 | 227.5 |
| Albertsons Companies Inc. (ACI) | 35.34 | 17.3 | 110.3 |
| Luckin Coffee Inc. (LKNCY) | 10.50 | 2.7 | 78.9 |
| Russell 1000 Index | N/A | N/A | 8.2 |
| SPDR S&P Retail ETF (XRT) | N/A | N/A | -13.5 |
Source: YCharts
- Dillard’s Inc.: Dillard’s is a retailer of fashion apparel, cosmetics, home furnishing, and other consumer goods. Its merchandise is available in more than 250 locations and 30 clearance centers across 29 U.S. states and online. The company also builds and remodels stores through its construction business, CDI Contractors, LLC.
- Albertsons Companies Inc.: Albertsons is an American food and drug retailer. It operates retail food and drug stores with pharmacies and associated fuel centers across 34 states and the District of Columbia.
- Luckin Coffee Inc. (LKNCY): Luckin Coffee is a Chinese coffee company that also operates a coffeehouse chain. Despite delisting from the Nasdaq exchange in June 2020, shares of Luckin have traded over the counter in the U.S., valuing the company at about $2.7 billion. Luckin Coffee is exploring options to relist its shares in the U.S. before the year ends, according to a recent report in the Financial Times.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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