Retailers are overhauling their operations as technology redefines the shopping experience. But many seem to be moving too slowly as their demand is lagging, causing the industry to underperform the market - over the past six months, retail stocks have shed 3.4%. This drawdown was disheartening since the S&P 500 gained 3.4%.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here is one resilient consumer stock at the top of our shopping list and two best left ignored.
Two Consumer Retail Stocks to Sell:
Victoria's Secret (VSCO)
Market Cap: $4.25 billion
Spun off from L Brands in 2020, Victoria’s Secret (NYSE: VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.
Why Does VSCO Worry Us?
- Sales trends were unexciting over the last three years as its 1.1% annual growth was below the typical consumer retail company
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 16.2% annually
Victoria's Secret is trading at $52.90 per share, or 15x forward P/E. Read our free research report to see why you should think twice about including VSCO in your portfolio.
Macy's (M)
Market Cap: $5.30 billion
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Why Do We Steer Clear of M?
- Recent store closures and weak same-store sales point to soft demand and an operational restructuring
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Earnings per share have dipped by 20.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
At $20.09 per share, Macy's trades at 9.6x forward P/E. Dive into our free research report to see why there are better opportunities than M.
One Consumer Retail Stock to Watch:
Ross Stores (ROST)
Market Cap: $72.92 billion
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ: ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Why Are We Fans of ROST?
- Same-store sales growth lends it the confidence to gradually expand its store base so it can reach more customers
- Comparable store sales rose by 3.6% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Ross Stores’s stock price of $226.50 implies a valuation ratio of 30.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
