At first glance, the concept of acquiring the best retail stocks might seem counterintuitive. After all, it wasn’t that long ago that government agencies removed Covid-19 restrictions. Prior to that event, the pandemic wrought significant devastation on the global economy. So, acquiring equity in retailers – whether discretionary or otherwise – seems risky.
People should be saving money, after all. Look at what’s going on in China. Young people – the nation’s Generation Z members – are engaging in a phenomenon called revenge saving. However, an important point to remember here is that it largely appears to be a Chinese phenomenon. In other countries (including here at home in the U.S.), consumers are eagerly opening their wallets.
Indeed, a Vox article seemingly bemoaned in its title, “Why are Americans spending so much?” To be fair, there are quite a few households that are hurting and therefore trimming their budget. However, because of the K-shaped recovery, there are also plenty of people buying what they can. It sets up an interesting framework for the best retail stocks to buy this month.
Amazon (AMZN)
In terms of growth opportunities, Amazon (NASDAQ:AMZN) may appear long in the tooth. Certainly, it’s a mature enterprise and there doesn’t seem to be much more it can do to dominate. However, the latest data regarding e-commerce transactions as a percentage of total retail sales shows that people are increasingly moving online. Fundamentally, this bodes very well for AMZN stock.
Further, the company continues to demonstrate its financial prowess. Between the second quarter of 2023 to Q1 2024, Amazon’s average earnings per share hit reached 87.3 cents. Analysts on average were expecting EPS of roughly 63 cents during this period. This print translated to an earnings surprise of 47.78%.
During the trailing 12 months, the company posted EPS of $3.58 on sales of $590.74 billion. For fiscal 2024, covering experts believe that the bottom line could expand by 45.9%. If so, EPS would land at $4.23. On the top line, sales may rise by 3.4% to hit $594.57 billion. While it’s an obvious idea for best retail stocks to buy this month, it’s very much relevant.
Coupang (CPNG)
If you want to dial up your risk-reward profile, you may want to consider Coupang (NYSE:CPNG). An e-commerce company incorporated in Delaware, the company focuses on the South Korean market. In fact, many analysts refer to Coupang as the Amazon of South Korea. Since AMZN ranks among the best retail stocks, this may be a lucrative comparison.
To be fair, the e-commerce specialist’s bottom-line performance is spotty. In the past four quarters, the company posted an average EPS of 5.3 cents. However, experts anticipated 6 cents. In terms of earnings surprise, the metric fell into negative territory or 8.83% below parity. Nevertheless, the focus should be on the top line.
In the TTM period, Coupang generated net income of $1.27 billion on sales of $25.7 billion. In the most recent quarter, the revenue growth rate (year-over-year) landed at 22.6%. For fiscal 2024, analysts admittedly see EPS slumping 85% to only 4 cents. However, revenue could jump 24.5% to $30.35 billion. Further, the high-side estimate may hit $31.28 billion.
Notably, the last time Coupang missed its quarterly revenue target was in Q4 2022. It’s a tempting choice for best retail stocks.
Tractor Supply (TSCO)
Conservative groups have long claimed that if you go woke, you go broke. With Tractor Supply (NASDAQ:TSCO), we’re going to see if the opposite applies: go sleep, go reap (as in, major profits). If you haven’t heard, Tractor Supply angered many of its customers for supporting various diversity, equity and inclusion protocols, as well as initiatives focused on sustainability and environmental stewardship.
So, Tractor Supply – probably looking to Anheuser-Busch (NYSE:BUD) as a reference point – backed out of its diversity protocols. The move hasn’t gone over well among those pushing for greater inclusion, as you might imagine. If anything, the decision could be cynical. Essentially, the consumer demographics of the company roughly match that of the U.S.
It’s a slippery slope but the message seems to be that if you’re going to tick off a consumer base, you might as well disappoint the numeric minority. I’m fascinated with the sociological implications and will be monitoring the issue closely.
In the meantime, analysts see fiscal 2024 revenue rising 2.9% to $14.98 billion. If we’re just looking at numbers and not the politics, TSCO could be one of the best retail stocks.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
