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 e-commerce companies. Some of the biggest retail companies include Walmart Inc. (WMT), Amazon.com Inc. (AMZN), and Costco Wholesale Corp. (COST).
Retail stocks, as represented by the SPDR S&P Retail ETF (XRT), have outperformed the broader market. XRT has provided a total return of 23.1% over the past 12 months, above the Russell 1000’s total return of 13.7%, as of September 22, 2020. All statistics in the tables below are as of September 23.
Here are the top 3 retail stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Retail Stocks
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 you’re paying less for each dollar of profit generated.
- Big Lots Inc.: Big Lots operates retail stores. The company offers an assortment of merchandise, including consumables, seasonal products, furniture, electronics, housewares, toys, and more. Big Lots reported net income growth of 7,215.8% on net sales growth of 31.3% in Q2 2020, which ended August 1, 2020. Net income was significantly boosted by gains on the sale of distribution centers in a number of states, which amounted to an after-tax benefit of $341.9 million. Big Lots also has thrived during the pandemic by offering low prices on a wide range of products, including frozen foods, and keeping many of its stores open while many rival retailers kept some or all of their outlets closed.
- Ingles Markets Inc.: Ingles Markets is a regional supermarket chain. It offers products in each of the following categories: grocery, non-foods, perishables, and other.
- Albertsons Companies Inc.: Albertsons Companies is a grocery store company that operates food and drug retail stores. It offers grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. The company reported net income growth of 1,096.3% on revenue growth of 21.4% in Q1 of its 2020 fiscal year (FY), the three-month period ended June 20, 2020. Net income was positively affected by cost of sales and other expenses that, proportional to total sales, were relatively lower than the year-ago quarter. The company said that digital sales grew 276%, largely driven by the COVID-19 pandemic.
Fastest Growing Retail Stocks
These are the retail stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Retail Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Big Lots Inc. (BIG)||45.68||1.8||6,960|
|JD.com Inc. (JD)||75.00||116.6||2,700|
|Albertsons Companies Inc. (ACI)||13.90||6.6||1,350|
- Big Lots Inc.: See above for company description.
- JD.com Inc.: JD.com is a China-based e-commerce company that offers a wide selection of products through its website and mobile applications. The company offers appliances, computers, digital products, communication products, garments, books, and more. JD.com announced in mid-August that is has entered into a definitive agreement to acquire a controlling interest in Kuayue-Express Group Co. Ltd., a modern integrated express transportation enterprise, for RMB3 billion ($0.4 billion).
- Albertsons Companies Inc.: See above for company description.
Retail Stocks with the Most Momentum
These are the retail stocks that had the highest total return over the last 12 months.
- CarParts.com Inc.: CarParts.com is an online provider of aftermarket parts for automobiles. The company sells mirrors, engines, headlights, brakes, interior and exterior accessories, tools, wheels, bumpers, and other parts. CarParts.com reported net sales that grew 61.4% to a record $118.9 million in Q2 2020, which ended June 27, 2020. The company reported net income of $1.6 million compared to a net loss of $1.5 million posted in the year-ago quarter.
- Overstock.com Inc.: Overstock.com is an e-commerce retailer. The company is focused on offering discounted brand-name merchandise, including bed-and-bath goods, kitchenware, jewelry, sporting goods, electronics, and more.
- GrowGeneration Corp.: GrowGeneration is a distributor of agricultural products. The company operates retail hydroponic and organic specialty gardening retail outlets. It offers plant nutrition, farming soils, crops, advanced lighting technology, hydroponic and aquaponic equipment, and more. GrowGeneration reported revenue that grew 123.0% to a record $43.5 million in Q2 2020, which ended June 30, 2020. Net income for the quarter rose 142.4%.