The U.S. economy grew 6.9% in the fourth quarter of last year, and 5.7% in 2021. That’s the fastest growth since 1984. That sets the stage for a strong start for retail stocks in 2022.
Yes, the markets have been taking it on the chin in recent weeks, but much of that is sector rotation in anticipation of rising inflation and the Federal Reserve’s transition out of the ZIRP (zero interest rate policy) economy it has been controlling with other central banks since 2008.
With less Fed intervention, markets will again be more dynamic than they have been in for the past decade and a half. That volatility is on clear display now, but it will quiet down in coming quarters. This is the ideal time to position yourself for what’s to come, in the sectors that are up and coming. Retail stocks are one of them.
With that said, here’s a collection lesser known retailers with plenty of growth ahead of them:
- Albertsons (NYSE:ACI)
- Boot Barn (NYSE:BOOT)
- Destination XL Group (NASDAQ:DXLG)
- J Jill (NYSE:JILL)
- Murphy USA (NYSE:MUSA)
- Shoe Carnival (NASDAQ:SCVL)
- Signet Jewelers (NYSE:SIG)
As an added cherry on top, each of these retail stocks has an “A” rating in my Portfolio Grader, so you know they’re solid opportunities.
Retail Stocks: Albertsons (ACI)
While the original Albertsons started in Boise, Idaho in 1939, it has undergone quite a journey since those days. The grocery sector is a very challenging, low-margin business with a lot of competition. And if you’re going to compete on a national scale — ACI operates in 34 states — you have to know what you’re doing.
The original Albertsons got caught in the M&A craze of the 1990s with a variety of grocery stores, drug stores and fuel operations. In those wheeling and dealing days, big grocery store chains were being sliced and diced all the time. And that was also the fate of Albertsons.
Only in 2019 did ACI emerge from all this and relist as a publicly traded company. But since then, it has been a solid performer.
In the past 12 months, ACI stock has risen 61%, yet it still trades at current price-to-earnings ratio below 16x. It also still delivers a 1.8% dividend. The pandemic helped boost its revenues, but the stock has come off those highs and is set for more growth moving forward.
Boot Barn (BOOT)
Launched in 1978, BOOT is now the largest western and work wear retailer in the U.S. It offers all the clothes, footwear and accessories workers need when they are working their ranches, farms or going for a night on the town.
With a market cap just below $3 billion, it’s a small, mid-cap stock that has continued to grow operations across the decades through a variety of economic challenges. That time-tested success is important in times like we’re experiencing now.
Plus, the Western mystique and U.S. workwear clothing is becoming very popular outside the US. And having a well-constructed e-commerce site has boosted sales beyond its physical stores.
BOOT stock has gained nearly 60% in the past 12 months, even after losing 25% year-to-date. It’s a hot sector player in retail stocks and it’s still a bargain. BOOT trades at a current P/E just below 16x.
Retail Stocks: Destination XL Group (DXLG)
More than 40% of Americans are obese. And while the U.S. used to be the tallest country in the world (a sign of healthy diets and lifestyles) today it’s closer to No. 50. But part of that can also be attributed to the fact the U.S. is a melting pot and recent immigrant groups have brought the average height down.
One thing that remains is there are few retail establishments that are specifically focused on larger sizes for men.
DXLG specializes in menswear for customers that are XL or larger. It was founded in 1976, has become a successful specialty retailer for larger men that still want quality clothing with a tailored, professional fit. Sometimes this can be a challenge when trying to find fitted clothes at general clothing retailers.
DXLG stock has just a $277 million market cap and that grown briskly in the past 52-weeks; the stock has risen a whopping 549%. Yet it still trades at a current P/E of just 7x. There’s no changing the demographics in the U.S. (or its other markets in Canada or the U.K.) quickly, so this trend is going to continue.
J Jill (JILL)
One of the smaller retail stocks on this list, JILL sports a market cap of just $145 million. It’s a womenswear mid-range retailer that generally focuses on clothes for boomer and older Gen X demographic.
It had a tough go of it until the pandemic turned its fortunes around somewhat. It has both retail stores and a vibrant web presence. Its upturn during the pandemic was likely due to mothballing retail outlets and wider margins in its e-commerce business.
Fiscal Q3 ended for JILL on Oct. 30, and it reported a profit for the quarter, up from a loss in Q2. It also announced it was shuttering 20 stores by the end of FY2021 to help lessen supply chain issues.
JILL stock has soared 281% in the past year and remains one of the hotter small retail stocks out there. More strong growth will boost earnings and further enhance its success.
Retail Stocks: Murphy USA (MUSA)
Headquartered in Arkansas, and a Fortune 500 member with a market cap of $4.8 billion, MUSA is a solid mid-cap gas service station and convenience store operator. It also helps that its service stations tend to be linked to fellow Arkansas retailer Walmart (NYSE:WMT). It has around 1,500 stores in 26 states and located with 1,100 Walmart stores.
There’s a whole group of retailers of various stripes that build small strip malls around a Walmart anchor store, and MUSA is one of them. Given high gasoline prices, this strategy works well for consumers that are price-conscious shoppers.
MUSA stock has done well in the past 12 months, rebounding with the rest of the energy patch. It’s up 55% over the past year and up nearly 15% in the past three months.
Shoe Carnival (SCVL)
Launched in Illinois in 1978, SCVL is a small-cap footwear retailer that continues post solid numbers and grow its business. In December, the company acquired Shoe Station on its way to fulfilling its goal of having 400 stores operating by the end of 2022.
Most of its stores are located in the Midwest. And it also has a growing e-commerce business, selling a number of contemporary name brands to men, women and children.
SCVL stock has gained 45% in the past 12 months, yet has a current P/E just below 7x. Due to the rise in the stock, the dividend is sitting just below 1%. This is more a growth story than a total return story.
Retail Stocks: Signet Jewelers (SIG)
You may not have heard the name before when you’re shopping for diamonds, but SIG is the world’s largest retailer of diamonds. It operates in the U.S., Canada and the U.K.
The reason you haven’t heard of SIG is because it operates as the middleman. Its retail operations may be more familiar: Kay Jewelers, Zales, Jared, JamesAllen.com and others.
As we’ve seen in recent years, real assets have been hot. Everything from used cars to non-fungible tokens (NFTs) have become potential stores of value. And diamonds are no different.
SIG stock is up 108% in the past 52 weeks and hasn’t slipped too much in all this market turmoil. It’s a decent-sized mid-cap with a $4.3 billion market cap. It’s trading at a current P/E just south of 8x.
On the date of publication, Louis Navellier has positions in BOOT, SCVL and SIG in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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