Despite the pressure of higher prices and elevated interest rates, which have weighed on consumer budgets throughout the year, the latest July data reveals a surprisingly resilient spending trend. Retail sales surged 1% from June to July, marking the largest jump since January 2023 and a sharp rebound from earlier declines.
That being said, while Roth MKM analysts currently maintain a cautious “underweight” position on the retail sector, the firm noted that the latest monthly sales data, alongside a stronger-than-expected Q2 earnings report from sector giant Walmart (WMT), have sparked a notable boost in the S&P Retail SPDR (XRT).
JC O'Hara, the firm’s chief market technician, highlighted ongoing concerns about the consumer sector, noting that the most significant risk would be more weak labor market data. But for those investors eager to strategically boost their retail exposure, Roth MKM has spotlighted five standout stocks primed to capitalize on consumer spending trends.
Retail Stock #1: Carvana
Founded in 2012, Arizona-based Carvana Co. (CVNA) is transforming the car-buying experience with its innovative, all-online platform. In just a decade, this company has redefined automotive retail, allowing customers to browse tens of thousands of vehicles, secure financing, trade-in, and purchase, all from the comfort of home. With delivery or local pickup available in over 300 U.S. markets, Carvana's vertically integrated platform continues to delight millions of customers across the nation.
Valued at $31.7 billion by market cap, shares of this car retailer have soared a stunning 306% over the past 52 weeks and 194% on a YTD basis, crushing the broader S&P 500 Index’s ($SPX) gain of 27.3% over the past 52 weeks and 17.1% on a YTD basis.
Wall Street appears cautiously optimistic about CVNA stock, giving it a consensus “Moderate Buy” rating. Of the 19 analysts tracking the stock, five recommend a “Strong Buy,” one suggests a “Moderate Buy,” 12 advise a “Hold,” and one advocates a “Moderate Sell” rating.
While the stock is already trading at a premium to its mean price target of $144.40, the Street-high target of $200 implies potential upside of 28.8% from current levels.
Retail Stock #2: Burlington Stores
Headquartered in New Jersey, Burlington Stores, Inc. (BURL) is a leading off-price retailer with over 1,000 stores across the U.S. With a market cap of roughly $17.3 billion, Burlington continues to attract value-conscious shoppers with a diverse range of products, from women’s apparel and menswear to home goods and toys.
The company is slated to announce its fiscal 2024 Q2 earnings results before the market opens on Thursday, Aug. 29.
Shares of Burlington have rallied an impressive 64.4% over the past 52 weeks, easily outpacing the broader SPX’s gains during this time frame. Over the past three months alone, BURL stock is up 45.5%, and set a two-year high of $274.22 in Wednesday’s session.
Analysts maintain a consensus rating of “Strong Buy” on BURL stock. Out of 19 analysts in coverage, 17 advise a “Strong Buy,” and two have a “Hold” rating.
The mean target price of $272.78 is nearly flat with current prices. However, the Street-high target price of $300 suggests that BURL stock could rally as much as 11.3% from here.
Retail Stock #3: Boot Barn
With over 382 stores across 44 states and a robust e-commerce presence, California-based Boot Barn Holdings, Inc. (BOOT) has emerged as one of the leading and fastest-growing lifestyle retail chains in the U.S., dedicated to western and work-related gear. Founded in 1978, the company commands a market cap of around $4.2 billion.
BOOT stock has outperformed the broader market over the past 52 weeks, boasting gains of nearly 50%. In 2024 alone, shares of Boot Barn have surged more than 80%.
Analysts appear highly bullish on Boot Barn’s prospects. BOOT stock has a consensus "Strong Buy" rating overall. Out of 13 analysts covering Boot Barn, 10 recommend a "Strong Buy," and the remaining three suggest a "Hold" rating.
The mean price target of $144.91 implies an expected upside of 4.4% from current levels, while the Street-high of $154 is a premium of about 11%.
Retail Stock #4: Caleres
Boasting over 140 years of craftsmanship, Saint Louis-based Caleres, Inc. (CAL) is a leading footwear powerhouse with a diverse portfolio of global brands, including Famous Footwear, Sam Edelman, Allen Edmonds, Naturalizer, and Vionic. With a presence in nearly 1,000 retail stores, major department and specialty stores, branded e-commerce sites, and numerous third-party platforms, Caleres ensures its products are accessible virtually everywhere.
Valued at $1.5 billion by market cap - and fresh off its record high of $43, set on Aug. 19 - shares of this retailer have outperformed the broader market, with gains of 62.3% over the past 52 weeks and 36.3% on a YTD basis.
Overall, CAL stock has a consensus "Moderate Buy" rating on Wall Street. Out of three analysts in coverage, two recommend a "Strong Buy," and one suggests a "Hold" rating. The mean price target of $44.67 implies an expected upside of 7% from current levels.
Retail Stock #5: Arko Corp
Virginia-based Arko Corp. (ARKO) is a leading force in the convenience store and fuel wholesale sectors across the U.S. Arko’s operations are structured into four key segments: retail, wholesale, GPM petroleum, and fleet fueling. These segments encompass a broad spectrum of services, from running convenience stores and supplying fuel to independent dealers, to managing a nationwide network of fueling sites and proprietary fuel cards.
With a market cap of around $738.4 million, shares of Arko have tumbled 19.8% over the past 52 weeks and 25.9% on a YTD basis.
Wall Street maintains a consensus rating of “Moderate Buy” on ARKO stock, with a mean target price of $7.94. This indicates a 29.5% upside potential from current levels. Out of four analysts covering the stock, two advise a “Strong Buy” rating, and two recommend a “Hold” rating.
