Deep Dive: These 15 stocks of retailers are expected to rise up to 97% over the next year

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With so many challenges for traditional retailers, investors can be forgiven for giving up on the entire sector. But there is money to be made if you focus on innovative sellers and maybe even on traditional brick-and-mortar retailers that are cleaning up their acts.

Below are two lists of stocks of retailers, broadly defined by FactSet to include specialized companies such as Vroom Inc. VRM, -0.20% and Carvana Co. CVNA, +1.95%, which sell (and buy) used cars online. The first list includes 15 stocks that analysts expect to rise the most over the next year, and the second list shows companies expected to increase their sales the most over the next two years.

Two retailers that didn’t make either list are Macy’s Inc. M, +1.34% and Target Corp. TGT, -0.25%. Both are worth watching, although investors with shorter-term horizons may find them pricey.

Shares of Macy’s had nearly doubled for 2021 through last week. The stock popped 20% on Aug. 19, after the company reported a 61% increase in comparable-store quarterly sales from a year earlier, established a quarterly dividend and announced an expanded partnership with WHP Global to sell more Toys ‘R’ Us items in its stores. The stock closed at $ 22.39 on Aug. 20 — a penny above the consensus 12-month price target among analysts polled by FactSet. Of course, analysts can change their estimates in light of recent news.

Target’s stock is up 49% this year. The company also reported a much-improved second quarter and expanded its partnership with Walt Disney Co. DIS, +1.46%. Target’s shares closed at $ 253.40 on Aug. 20, 10% below the consensus price target of $ 277.66.

Analysts’ favorite retail stocks

Starting with the Russell 3000 Index RUA, +1.12%, there are 124 stocks of companies in retail industries, according to FactSet’s industry group descriptions. These include online retailers such as Amazon.com Inc. AMZN, +2.11% and the direct used-auto retailers mentioned above.

Among those stocks, 77 have stock-market values of at least $ 1 billion, are covered by at least five analysts polled by FactSet and have consensus sales and earnings estimates available through 2023.

Here are the 15 stocks with majority “buy” or equivalent ratings that the analysts believe have the most upside potential over the next year:

Company Share “buy” ratings Closing price – Aug. 20 Consensus price target Implied 12-month upside potential
Vroom Inc. VRM, -0.20% 67% $ 25.02 $ 49.25 97%
RealReal Inc. REAL, +1.74% 67% $ 12.35 $ 24.31 97%
Overstock.com Inc. OSTK, +1.54% 100% $ 69.58 $ 127.60 83%
ChargePoint Holdings Inc. Class A CHPT, +2.49% 88% $ 21.26 $ 36.00 69%
Group 1 Automotive Inc. GPI, +1.60% 67% $ 159.01 $ 251.40 58%
Leslie’s Inc. LESL, +0.09% 75% $ 22.59 $ 32.64 44%
Lithia Motors Inc. LAD, +2.24% 64% $ 328.51 $ 468.83 43%
IAA Inc. IAA, +0.69% 90% $ 51.71 $ 72.38 40%
Abercrombie & Fitch Co. Class A ANF, +1.58% 58% $ 38.02 $ 52.11 37%
Tapestry Inc. TPR, +3.89% 62% $ 40.58 $ 54.89 35%
Capri Holdings Ltd. CPRI, +5.12% 61% $ 54.33 $ 72.35 33%
Sonic Automotive Inc. Class A SAH, +0.32% 56% $ 50.25 $ 65.71 31%
Amazon.com Inc. AMZN, +2.11% 98% $ 3,199.95 $ 4,164.30 30%
Hibbett Inc. HIBB, +2.97% 83% $ 85.14 $ 110.67 30%
American Eagle Outfitters Inc. AEO, +0.80% 64% $ 32.37 $ 41.31 28%
Source: FactSet

You can click on the tickers for more about each company, including business profiles, news coverage and price ratios.

Using the same order, here are sales estimates for the group through 2023:

Company Expected two-year sales increase Estimated revenue – 2021 Estimated revenue – 2022 Estimated revenue – 2023
Vroom Inc. VRM, -0.20% 117% $ 3,060 $ 4,514 $ 6,652
RealReal Inc. REAL, +1.74% 65% $ 447 $ 592 $ 736
Overstock.com Inc. OSTK, +1.54% 17% $ 2,830 $ 3,186 $ 3,321
ChargePoint Holdings Inc. Class A CHPT, +2.49% 175% $ 200 $ 328 $ 550
Group 1 Automotive Inc. GPI, +1.60% 11% $ 13,480 $ 14,680 $ 15,025
Leslie’s Inc. LESL, +0.09% 14% $ 1,342 $ 1,442 $ 1,536
Lithia Motors Inc. LAD, +2.24% 41% $ 21,902 $ 26,515 $ 30,801
IAA Inc. IAA, +0.69% 15% $ 1,706 $ 1,781 $ 1,962
Abercrombie & Fitch Co. Class A ANF, +1.58% 4% $ 3,680 $ 3,847 $ 3,841
Tapestry Inc. TPR, +3.89% 11% $ 6,066 $ 6,531 $ 6,725
Capri Holdings Ltd. CPRI, +5.12% 24% $ 5,017 $ 5,752 $ 6,205
Sonic Automotive Inc. Class A SAH, +0.32% 34% $ 12,390 $ 14,196 $ 16,569
Amazon.com Inc. AMZN, +2.11% 38% $ 476,170 $ 563,466 $ 657,295
Hibbett Inc. HIBB, +2.97% 13% $ 1,504 $ 1,581 $ 1,706
American Eagle Outfitters Inc. AEO, +0.80% 17% $ 4,917 $ 5,355 $ 5,742
Source: FactSet

The estimates are for calendar years, but note that many retailers’ fiscal years don’t match the calendar.

Also using the same list, here are estimates for earnings per share through 2023:

Company Expected two-year EPS change Estimated EPS – 2021 Estimated EPS – 2022 Estimated EPS – 2023
Vroom Inc. VRM, -0.20% N/A -$ 2.50 -$ 2.45 -$ 2.24
RealReal Inc. REAL, +1.74% N/A -$ 2.05 -$ 1.35 -$ 1.00
Overstock.com Inc. OSTK, +1.54% -4% $ 2.56 $ 2.73 $ 2.46
ChargePoint Holdings Inc. Class A CHPT, +2.49% N/A -$ 1.23 -$ 0.42 -$ 0.23
Group 1 Automotive Inc. GPI, +1.60% -19% $ 30.30 $ 28.09 $ 24.61
Leslie’s Inc. LESL, +0.09% 16% $ 0.85 $ 0.90 $ 0.98
Lithia Motors Inc. LAD, +2.24% -2% $ 33.22 $ 31.61 $ 32.59
IAA Inc. IAA, +0.69% 19% $ 2.33 $ 2.44 $ 2.76
Abercrombie & Fitch Co. Class A ANF, +1.58% -10% $ 3.16 $ 3.18 $ 2.85
Tapestry Inc. TPR, +3.89% 22% $ 3.17 $ 3.55 $ 3.85
Capri Holdings Ltd. CPRI, +5.12% 53% $ 3.93 $ 5.17 $ 5.99
Sonic Automotive Inc. Class A SAH, +0.32% 7% $ 7.03 $ 7.37 $ 7.52
Amazon.com Inc. AMZN, +2.11% 74% $ 53.15 $ 67.39 $ 92.34
Hibbett Inc. HIBB, +2.97% 13% $ 8.89 $ 8.88 $ 10.04
American Eagle Outfitters Inc. AEO, +0.80% 34% $ 1.97 $ 2.33 $ 2.63
Source: FactSet

For three of the companies, the expected two-year change in EPS is “N/A” because estimated earnings for 2021 or 2023, or both, are negative.

Fastest expected sales increases

Starting again with the 77 retailers that have market capitalizations of at least $ 1 billion and are covered by at least five analysts polled by FactSet, here are the 15 expected to increase their sales the most over the next two years:

Company Expected two-year sales increase Estimated revenue – 2021 Estimated revenue – 2022 Estimated revenue – 2023
ChargePoint Holdings Inc. Class A CHPT, +2.49% 175% $ 200 $ 328 $ 550
Vroom Inc. VRM, -0.20% 117% $ 3,060 $ 4,514 $ 6,652
Carvana Co. Class A CVNA, +1.95% 76% $ 11,775 $ 15,468 $ 20,680
RealReal Inc. REAL, +1.74% 65% $ 447 $ 592 $ 736
Revolve Group, Inc Class A RVLV, +2.98% 47% $ 818 $ 1,004 $ 1,206
Etsy Inc. ETSY, -1.77% 47% $ 2,280 $ 2,747 $ 3,351
Floor & Decor Holdings Inc. Class A FND, -0.51% 46% $ 3,339 $ 4,007 $ 4,874
Five Below Inc. FIVE, +0.61% 41% $ 2,717 $ 3,264 $ 3,841
Stitch Fix Inc. Class A SFIX, +2.37% 41% $ 2,240 $ 2,622 $ 3,161
Lithia Motors Inc. LAD, +2.24% 41% $ 21,902 $ 26,515 $ 30,801
Wayfair Inc. Class A W, -0.92% 39% $ 14,393 $ 17,228 $ 20,049
Amazon.com Inc. AMZN, +2.11% 38% $ 476,170 $ 563,466 $ 657,295
Lululemon Athletica Inc. LULU, +1.69% 37% $ 5,804 $ 6,877 $ 7,963
Sonic Automotive Inc. Class A SAH, +0.32% 34% $ 12,390 $ 14,196 $ 16,569
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.22% 26% $ 1,868 $ 2,088 $ 2,363
Source: FacSet

Only five companies make both this list and that with the most implied upside potential for their stock price: ChargePoint Holdings Inc. CHPT, +2.49%, Vroom, RealReal Inc. REAL, +1.74%, Lithia Motors Inc. LAD, +2.24%, Amazon and Sonic Automotive Inc. SAH, +0.32%.

Here are EPS estimates for the list of best expected sales growers, using the same order as those with the fastest expected sales growth:

Company Expected two-year earnings increase Estimated EPS – 2021 Estimated EPS – 2022 Estimated EPS – 2023
ChargePoint Holdings Inc. Class A CHPT, +2.49% N/A -$ 1.23 -$ 0.42 -$ 0.23
Vroom Inc. VRM, -0.20% N/A -$ 2.50 -$ 2.45 -$ 2.24
Carvana Co. Class A CVNA, +1.95% N/A -$ 1.12 -$ 0.30 $ 1.70
RealReal Inc. REAL, +1.74% N/A -$ 2.05 -$ 1.35 -$ 1.00
Revolve Group, Inc Class A RVLV, +2.98% 46% $ 1.02 $ 1.19 $ 1.49
Etsy Inc. ETSY, -1.77% 62% $ 3.03 $ 3.52 $ 4.90
Floor & Decor Holdings Inc. Class A FND, -0.51% 45% $ 2.46 $ 2.88 $ 3.56
Five Below Inc. FIVE, +0.61% 45% $ 4.57 $ 5.60 $ 6.64
Stitch Fix Inc. Class A SFIX, +2.37% N/A -$ 0.42 -$ 0.24 $ 0.43
Lithia Motors Inc. LAD, +2.24% -2% $ 33.22 $ 31.61 $ 32.59
Wayfair Inc. Class A W, -0.92% 113% $ 3.27 $ 4.74 $ 6.97
Amazon.com Inc. AMZN, +2.11% 74% $ 53.15 $ 67.39 $ 92.34
Lululemon Athletica Inc. LULU, +1.69% 50% $ 6.73 $ 8.33 $ 10.08
Sonic Automotive Inc. Class A SAH, +0.32% 7% $ 7.03 $ 7.37 $ 7.52
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.22% 23% $ 2.93 $ 3.24 $ 3.61
Source: FactSet

Here’s a summary of analysts’ opinion about the list of best expected sales growers, also in the same order:

Company Share “buy” ratings Closing price – Aug. 20 Consensus price target Implied 12-month upside potential
ChargePoint Holdings Inc. Class A CHPT, +2.49% 88% $ 21.26 $ 36.00 69%
Vroom Inc. VRM, -0.20% 67% $ 25.02 $ 49.25 97%
Carvana Co. Class A CVNA, +1.95% 58% $ 349.76 $ 379.09 8%
RealReal Inc. REAL, +1.74% 67% $ 12.35 $ 24.31 97%
Revolve Group, Inc Class A RVLV, +2.98% 71% $ 57.68 $ 70.67 23%
Etsy Inc. ETSY, -1.77% 76% $ 199.27 $ 215.93 8%
Floor & Decor Holdings Inc. Class A FND, -0.51% 87% $ 117.75 $ 136.36 16%
Five Below Inc. FIVE, +0.61% 67% $ 225.11 $ 232.70 3%
Stitch Fix Inc. Class A SFIX, +2.37% 38% $ 39.71 $ 62.13 56%
Lithia Motors Inc. LAD, +2.24% 64% $ 328.51 $ 468.83 43%
Wayfair Inc. Class A W, -0.92% 50% $ 290.52 $ 324.64 12%
Amazon.com Inc. AMZN, +2.11% 98% $ 3,199.95 $ 4,164.30 30%
Lululemon Athletica Inc. LULU, +1.69% 67% $ 397.83 $ 401.63 1%
Sonic Automotive Inc. Class A SAH, +0.32% 56% $ 50.25 $ 65.71 31%
Ollie’s Bargain Outlet Holdings Inc. OLLI, +1.22% 50% $ 82.70 $ 98.00 19%
Source: FactSet

If you see any stocks of interest here, you should do your own research and form your own opinion about the companies’ long-term strategies before considering an investment.

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