These 15 stocks of retailers are expected to rise up to 97% over the next year
By Philip van Doorn
Amazon is one of five that also make the list of those retailers expected to increase sales the fastest
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 (https://www.marketwatch.com/story/macys-beats-expectations-raises-guidance-and-announces-new-share-repurchase-program-2021-08-19?mod=mw_quote_news) a 61% increase in comparable-store quarterly sales from a year earlier, established a quarterly dividend (https://www.marketwatch.com/story/macys-new-dividend-makes-it-a-top-5-yielder-among-retail-peers-2021-08-19?mod=mw_quote_news&mod=article_inline) and announced an expanded partnership (https://www.marketwatch.com/story/macys-partnership-with-toys-r-us-is-part-of-a-merchandise-strategy-that-has-worked-for-target-11629401605) 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 (https://www.marketwatch.com/story/target-earnings-and-revenue-beat-expectations-11629283071) and expanded its partnership (https://www.marketwatch.com/story/target-prepares-for-the-holidays-with-expanded-disney-partnership-more-toy-exclusives-11629717900) 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 , 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
2021-08-24 11:21:00 GMT MW These 15 stocks of retailers are expected to -2-
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.
Don't miss:These stocks can defend your investment portfolio from inflation (https://www.marketwatch.com/story/these-stocks-can-defend-your-investment-portfolio-from-inflation-11629462172)
-Philip van Doorn
(END) Dow Jones Newswires
August 24, 2021 07:21 ET (11:21 GMT)
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