By Philip van Doorn
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. /zigman2/quotes/218801255/composite VRM +10.42% and Carvana Co. /zigman2/quotes/206651606/composite CVNA +19.54% , 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. /zigman2/quotes/201854387/composite M -1.66% and Target Corp. /zigman2/quotes/207799045/composite TGT +0.89% . 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. /zigman2/quotes/203410047/composite DIS -0.15% . 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 /zigman2/quotes/210598149/delayed RUA +0.33% , 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. /zigman2/quotes/210331248/composite AMZN +3.04% 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. /zigman2/quotes/218801255/composite VRM | 67% | $25.02 | $49.25 | 97% |
RealReal Inc. /zigman2/quotes/212846592/composite REAL | 67% | $12.35 | $24.31 | 97% |
Overstock.com Inc. /zigman2/quotes/200022359/composite OSTK | 100% | $69.58 | $127.60 | 83% |
ChargePoint Holdings Inc. Class A /zigman2/quotes/214140886/composite CHPT | 88% | $21.26 | $36.00 | 69% |
Group 1 Automotive Inc. /zigman2/quotes/202697225/composite GPI | 67% | $159.01 | $251.40 | 58% |
Leslie’s Inc. /zigman2/quotes/222187547/composite LESL | 75% | $22.59 | $32.64 | 44% |
Lithia Motors Inc. /zigman2/quotes/202974783/composite LAD | 64% | $328.51 | $468.83 | 43% |
IAA Inc. /zigman2/quotes/212739891/composite IAA | 90% | $51.71 | $72.38 | 40% |
Abercrombie & Fitch Co. Class A /zigman2/quotes/206677024/composite ANF | 58% | $38.02 | $52.11 | 37% |
Tapestry Inc. /zigman2/quotes/207417762/composite TPR | 62% | $40.58 | $54.89 | 35% |
Capri Holdings Ltd. /zigman2/quotes/206301876/composite CPRI | 61% | $54.33 | $72.35 | 33% |
Sonic Automotive Inc. Class A /zigman2/quotes/203357771/composite SAH | 56% | $50.25 | $65.71 | 31% |
Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN | 98% | $3,199.95 | $4,164.30 | 30% |
Hibbett Inc. /zigman2/quotes/201173500/composite HIBB | 83% | $85.14 | $110.67 | 30% |
American Eagle Outfitters Inc. /zigman2/quotes/209429711/composite 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. /zigman2/quotes/218801255/composite VRM | 117% | $3,060 | $4,514 | $6,652 |
RealReal Inc. /zigman2/quotes/212846592/composite REAL | 65% | $447 | $592 | $736 |
Overstock.com Inc. /zigman2/quotes/200022359/composite OSTK | 17% | $2,830 | $3,186 | $3,321 |
ChargePoint Holdings Inc. Class A /zigman2/quotes/214140886/composite CHPT | 175% | $200 | $328 | $550 |
Group 1 Automotive Inc. /zigman2/quotes/202697225/composite GPI | 11% | $13,480 | $14,680 | $15,025 |
Leslie’s Inc. /zigman2/quotes/222187547/composite LESL | 14% | $1,342 | $1,442 | $1,536 |
Lithia Motors Inc. /zigman2/quotes/202974783/composite LAD | 41% | $21,902 | $26,515 | $30,801 |
IAA Inc. /zigman2/quotes/212739891/composite IAA | 15% | $1,706 | $1,781 | $1,962 |
Abercrombie & Fitch Co. Class A /zigman2/quotes/206677024/composite ANF | 4% | $3,680 | $3,847 | $3,841 |
Tapestry Inc. /zigman2/quotes/207417762/composite TPR | 11% | $6,066 | $6,531 | $6,725 |
Capri Holdings Ltd. /zigman2/quotes/206301876/composite CPRI | 24% | $5,017 | $5,752 | $6,205 |
Sonic Automotive Inc. Class A /zigman2/quotes/203357771/composite SAH | 34% | $12,390 | $14,196 | $16,569 |
Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN | 38% | $476,170 | $563,466 | $657,295 |
Hibbett Inc. /zigman2/quotes/201173500/composite HIBB | 13% | $1,504 | $1,581 | $1,706 |
American Eagle Outfitters Inc. /zigman2/quotes/209429711/composite 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. /zigman2/quotes/218801255/composite VRM | N/A | -$2.50 | -$2.45 | -$2.24 |
RealReal Inc. /zigman2/quotes/212846592/composite REAL | N/A | -$2.05 | -$1.35 | -$1.00 |
Overstock.com Inc. /zigman2/quotes/200022359/composite OSTK | -4% | $2.56 | $2.73 | $2.46 |
ChargePoint Holdings Inc. Class A /zigman2/quotes/214140886/composite CHPT | N/A | -$1.23 | -$0.42 | -$0.23 |
Group 1 Automotive Inc. /zigman2/quotes/202697225/composite GPI | -19% | $30.30 | $28.09 | $24.61 |
Leslie’s Inc. /zigman2/quotes/222187547/composite LESL | 16% | $0.85 | $0.90 | $0.98 |
Lithia Motors Inc. /zigman2/quotes/202974783/composite LAD | -2% | $33.22 | $31.61 | $32.59 |
IAA Inc. /zigman2/quotes/212739891/composite IAA | 19% | $2.33 | $2.44 | $2.76 |
Abercrombie & Fitch Co. Class A /zigman2/quotes/206677024/composite ANF | -10% | $3.16 | $3.18 | $2.85 |
Tapestry Inc. /zigman2/quotes/207417762/composite TPR | 22% | $3.17 | $3.55 | $3.85 |
Capri Holdings Ltd. /zigman2/quotes/206301876/composite CPRI | 53% | $3.93 | $5.17 | $5.99 |
Sonic Automotive Inc. Class A /zigman2/quotes/203357771/composite SAH | 7% | $7.03 | $7.37 | $7.52 |
Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN | 74% | $53.15 | $67.39 | $92.34 |
Hibbett Inc. /zigman2/quotes/201173500/composite HIBB | 13% | $8.89 | $8.88 | $10.04 |
American Eagle Outfitters Inc. /zigman2/quotes/209429711/composite 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.























































































































































