At a time of high inflation, you may be wondering why I’m talking about retail stocks. After all, isn’t inflation bad news for the sector? In general, yes. It’s bad in two ways.

First, inflationary pressures in turn put pressure on profit margins for retailers. Not all rising costs can be passed on to the consumer. Second, the rising cost of energy, food, housing and other mandatory expenses is a negative for consumer spending.

Putting the two together, it seems counter-intuitive to run out and buy shares in retailers right now. Or is it? Many names in the sector are well-equipped to handle today’s challenges.

Better yet, due to the high uncertainty looming over the stock market, for the most part they’ve been held down in recent months. In short, it’s not too late to add these seven retail stocks to your portfolio:

• AutoNation (NYSE:AN)
• BJ’s Wholesale Club (NYSE:BJ)
• Costco (NASDAQ:COST)
• Dillard’s Inc (NYSE:DDS)
• Dollar Tree (NASDAQ:DLTR)
• Kroger (NYSE:KR)
• O’Reilly Automotive (NASDAQ:ORLY)

Retail Stocks: AutoNation (AN)

Based in Fort Lauderdale, Florida, AutoNation is America’s largest automotive retailer. With over 300 locations from coast-to-coast, the company’s dealerships sell new and used vehicles across many makes and models.

AN stock has been on a tear since 2020. With the automobile shortage driving up new and used car prices, it’s no surprise why. During 2021, operating income was nearly double what it was in the prior year and around 128% above what it was in 2019.

Trading for just four times this year’s projected earnings, the market is pre-emptively pricing-in a reversal of current trends. Yes, the run-up in used car prices may have already peaked.

But as supply chain disruptions continue, limiting the production of new cars, investors may be overestimating how quickly things will normalize. With upside in the near-term (as it remains a “dealer’s market” for automotive sales) and in the long-term (as the company puts its profits to work buying back shares and expanding the business), AN stock is a buy.

This stock has an “A” rating in my Portfolio Grader.

BJ’s Wholesale Club (BJ)

BJ’s may be a small fry compared to rival Costco. Yet I wouldn’t hold its relatively small size against it.

Even as it has just a fraction of the membership base, revenue and earnings of its better-known discount club peer, the company has similar profit margins. It’s also benefiting from the same tailwinds, resulting in solid operating performance both during the pandemic and during the pandemic recovery.

As soaring consumer prices drive households to buy in bulk, inflation at levels not seen since the early 1980s is more a boon than a challenge for this wholesale club operator.  Well-positioned to pass on rising costs to its members (as its prices beat that of general merchandisers and supermarkets), expect it to continue steadily growing its revenue and earnings.

Best of all? BJ stock is reasonably-priced, with a forward price-to-earnings (P/E) ratio of 21.

This stock has an “A” rating in my Portfolio Grader.

Retail Stocks: Costco (COST)

Earlier this month, enthusiasm for COST stock, one of the top-performing retail stocks of the past decade, cooled off temporarily. Despite beating estimates, the market wasn’t impressed with its most recent quarterly earnings report due to a slowdown in growth with its e-commerce segment.

However, this pullback didn’t last long. Costco shares today trade for above where they were ahead of earnings. As it’s still yet to get back to its high-water mark (hit late last year), now’s the perfect time to accumulate a position in this discount club leader.

Again, like with its smaller competitor BJ’s, inflation works more in Costco’s favor than out of it. Rising prices means more households will buy memberships (the price of which goes up with inflation) and make more shopping trips to the company’s 829 (and counting) warehouses.

Performing well in good times and bad times, the party is far from over here. COST stock is on its way back to its all-time high, then on to new highs, in the years ahead.

This stock has an “A” rating in my Portfolio Grader.

Dillard’s Inc (DDS)

Breaking out in price over the past eighteen months, you may think it’s too late to buy DDS stock. But while shares in this retailer, with operations primarily in the Southern and Southwestern United States, is up nearly 10x since late 2020, that doesn’t mean it’s set to head lower from here.

Trading at a low multiple to last year’s earnings, many are expecting the company to report less impressive results in the coming year. Supply chain disruptions did play a big role in its operating performance during 2021.

For the year, the company earned $862.5 million on $6.62 billion in sales, versus reporting $71.7 million in net losses on $4.43 billion in sales during 2020. Still, as the market may be assuming the environment will normalize much sooner than it actually will, I wouldn’t discount the chance this retailer again delivers results ahead of expectations.

Add in its plans to buy back $500 million worth of shares (representing around 9% of its market capitalization), and there’s still plenty in play to give DDS stock additional runway.

This stock has an “A” rating in my Portfolio Grader.

Retail Stocks: Dollar Tree (DLTR)

Most of the retail stocks discussed above have held steady through the market downturn so far in 2022. Yet by comparison, DLTR stock has been on a tear. Up 11% year-to-date, investors are piling in, as high inflation drives households to seek lower-cost substitutes for life’s necessities.

That’s exactly what Dollar Tree offers through its more than 8,000 stores (under the Dollar Tree and Family Dollar brands) in the U.S. and Canada. A purveyor of food and other everyday consumables plus other popular everyday household items, the company is helping consumers deal with the shrinking purchasing power of the dollar.

That’s all while improving its margins, through efforts like raising prices at its Dollar Tree locations (from $1 to $1.25 per item). Expected to earn around $7.95 per share this fiscal year (versus $5.68 per share last fiscal year), shares have already moved higher ahead of stronger results.

Even so, that doesn’t mean the factors on its side are already priced-in. Reasonably priced (at 20 times earnings) relative to its prospects, DLTR stock is another retailer to add to your shopping list.

This stock has an “A” rating in my Portfolio Grader.

Kroger (KR)

A few months back, investors were concerned that supermarket operator Kroger would struggle keeping ahead of inflation. Since then, however, sentiment has reversed in a big way.

Why? Following its latest earnings report, it’s clear that inflationary pressures are a big threat to its gross margins. In response to strong results and guidance, investors have dived back into KR stock. As a result, it has spiked more than 27% in the past month.

If you already own this, you may see its latest run-up as a reason to take the money and run. If you don’t own it yet, you may see it as a reason to stay away. However, if you choose to do so, this could prove to be a short-sighted move.

Between the strong chance it continues to deliver strong results, plus possible upside if more investors cycle into it as a “safe harbor” defensive play, don’t assume KR stock’s move to prices above $50 per share will be a short-lived one.

This stock has an “A” rating in my Portfolio Grader.

Retail Stocks: O’Reilly Automotive (ORLY)

The vehicle shortage isn’t just a boon for automotive retailers like AutoNation. It’s a boon for auto parts retailers like O’Reilly Automotive as well.

As the price of purchasing a new or used vehicle remains sky-high, U.S. households will continue holding onto their vehicles much longer than seen in previous generations. In 2021, the average age of a car on the road was 12.1 years.

This number will likely continue to rise as more vehicle last more than 200,000 miles and repairing an aging car, truck, or SUV becomes even more economical than replacing one. In turn, this points to continued strong revenue and earnings growth for this company and its more than 5,750 stores in the U.S. and Mexico.

Trading for around 21 times expected 2022 earnings, this is yet another retail stock where valuation hasn’t gotten ahead of itself. With strong performance likely leading it to higher prices, ORLY stock is a worthwhile buy today.

This stock has an “A” rating in my Portfolio Grader.

On the date of publication, Louis Navellier has positions in BJ, COST, DDS and KR 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.