Beyond the Big Three: 3 Attractive Retail Stocks Winning the Delivery Game

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  • Here are three retail stocks to buy now. 
  • Nordstrom (JWN): Department stores might be considered old school, but the Seattle retailer delivers digitally better than most. 
  • Abercrombie & Fitch (ANF): This retail stock is seeing a comeback and should stay hot. 
  • Advance Auto Parts (AAP): With new industry experience added to its board, this auto retailer should be back on track soon.  
retail stocks - Beyond the Big Three: 3 Attractive Retail Stocks Winning the Delivery Game

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U.S. retail stocks Walmart (NYSE:WMT), Amazon (NYSE:AMZN) and Target (NYSE:TGT) are using their delivery services to keep customers coming back. 

A recent article from Barron’s highlighted how the three companies are winning customers with superior delivery services. Target launched Target Circle 360, a paid service that includes same-day delivery. Walmart’s Walmart+ made one-hour delivery available and Amazon Prime has provided tw0-day delivery for years. 

“‘Shopping is dynamic, and so are we,’ said Cara Sylvester, Target’s chief guest experience officer, on the company’s earnings call last week, ‘The investments we’re making reflect our focus on consumers’ preferences and needs, so we continue to be their first choice for discovery, delight and experiences that make them smile,’” Barron’s reported on March 12.

But these three retail giants aren’t the only companies relying on delivery to gain customer loyalty. Here are three more attractive retail stocks for investors to take a look at.

Nordstrom (JWN)

A Nordstrom (JWN) storefront in Toronto, Canada.
Source: Jonathan Weiss / Shutterstock.com

On a list of top 100 omnichannel retailers in 2023 from the retail trade publication Total Retail, Nordstrom (NYSE:JWN) was tied for 3rd with 84 points out of 90. Although the company dropped two spots lower than last year, it still impressed the trade publication. 

There are plenty of detractors when it comes to department stores. Even though Nordstrom is part of this so-called “dying breed,” it consistently delivers for customers. Thanks to that, it’s got a shot at financial success over the long haul. 

JWN stock is down 55% over the past five years. No one has felt the decline more than the Nordstrom family, which owns more than 30% of its shares. They have a vested interest in returning it to its former glory. 

In 2023, digital sales accounted for 36% of the company’s revenue. The company’s adjusted EBITDA was $1.08 billion on $14.21 billion in revenue. Based on an enterprise value (EV) of $6.89 billion, it trades at just 7x EBITDA. Walmart’s EV/EBITDA is 15.3, more than double.  

Abercrombie & Fitch (ANF)

The front of an Abercrombie & Fitch (ANF) location.
Source: Paul McKinnon / Shutterstock.com

While Nordstrom would be the value play of the three retailers, Abercrombie & Fitch (NYSE:ANF) is the momentum or growth play. Its shares are up 42% year-to-date (YTD) and 398% over the past year.

Total Retail’s top 100 omnichannel retailers list gives Abercrombie a sixth-place ranking with 80.5 points out of 90. Surprisingly, rival American Eagle Outfitters (NYSE:AEO) is ranked higher in third position with 84 points. 

ANF posted Q4 2023 earnings of $2.97 a share, 14 cents better than the analyst estimate and more than three times its Q4 2022 earnings per share (EPS). On the top line, its revenue was $1.45 billion, $20 million higher than consensus and $250 million higher than a year ago. 

“With shares up six-fold since early 2023, now trading at a valuation associated with higher growth retailers at over 20 times, there was seemingly little the company could print to keep that going,” Barron’s reported William Blair analyst Dylan Carden’s comments to clients in a research note after earnings. 

ANF is one of three stocks I recommended in December that were up more than 200% in 2023. Abercrombie has the best performance so far in 2024.

Advance Auto Parts (AAP)

The outside of an Advanced Auto Parts storefront.
Source: James R. Martin / Shutterstock

A retailer of aftermarket auto parts might not be what first comes to mind when thinking about omnichannel retail success stories. However, as Total Retail’s ranking shows, Advance Auto Parts (NYSE:AAP) can hold its own in omnichannel retail. It was ranked 11th in 2023 with 77.5 points, while its two biggest competitors, O’Reilly Automotive (NASDAQ:ORLY) and AutoZone (NYSE:AZO), were 25th (70.5 points) and 18th (73 points), respectively. 

Over the past year, Advance has been the worst performer of the trio, down 30%. It was in the crosshairs of activist investors Third Point LLC and Saddle Point Management. The investors teamed up to make a less-than-5 % investment in 2023. Advance’s debt was downgraded to “junk” last September.  

The activists sought three directors for the board. On March 11, the parties reached an agreement that saw them get those three new directors, bringing the board to 12. The board members will add significant automotive experience. 

While its shares have risen significantly since the end of February, patient investors can expect plenty of potential upside. As far as retail stocks go, AAP has room to grow.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.


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