With the changing customer preferences, continuous economic growth, and rapid adoption of cutting-edge technologies like AR and AI, the retail industry is experiencing robust growth and is diversifying its operations.
Amid this backdrop, investors could consider investing in sound retail stocks Amazon.com, Inc. (AMZN), Walmart Inc. (WMT), and Target Corporation (TGT) for reliable returns in 2024.
U.S. retail sales remained unchanged in June as lower auto dealerships were offset by broad strength elsewhere, reflecting consumer resilience and strengthening economic growth prospects for the second quarter. Also, the expectations of Federal Reserve cutting interest rates starting from September and cooling inflation bolster economic growth.
Driven by the changing consumer preferences, technological developments, and emerging e-commerce trends forcing enterprising to innovate and transition toward multichannel retailing, the retail industry is expected to grow at a CAGR of 7.6%, resulting in a volume of $47.24 trillion by 2029.
Also, recent technological advancements like Augmented Reality (AR) have revolutionized the way customers interact with products and brands in retail market. AR offers immersive and personalized shopping experiences, improve operational efficiency, and create innovative marketing strategies.
With this, global augmented reality in retail market is expected to reach $62.30 billion by 2033, exhibiting growth at a CAGR of 41.7%.
Given these favorable market trends, let’s look at the fundamentals of the top retail stocks such as AMZN, WMT, and TGT.
Amazon.com, Inc. (AMZN)
AMZN engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores internationally. The company operates through three segments: North America; International; and Amazon Web Services (AWS).
On July 11, AMZN’s Amazon Web Services, Inc. expanded its partnership with Workday, Inc. (WDAY), a leading provider of solutions to help organizations manage their people and money. The companies will build generative artificial intelligence (AI) capabilities, jointly innovate new customer experiences, and invest in joint go-to-market initiatives.
The strategic partnership aims to accelerate customer cloud transformation, help customers increase productivity, grow and retain talent, and streamline business processes.
On July 10, AMZN’s Amazon Web Services, Inc. unveiled AWS App Studio, a generative artificial intelligence (AI)-powered service that uses natural language to create enterprise-grade applications. The new generative AI-powered service empowers a new set of builders to create applications in minutes.
For the first quarter that ended March 31, 2024, AMZN’s net sales increased 12.5% year-over-year to $143.31 billion. Its operating income grew 220.6% from the year-ago value to $15.31 billion. The company’s net income came in at $10.43 billion and $0.98 per share, up 228.8% and 216.1% from the prior year’s quarter, respectively.
Street expects AMZN’s revenue and EPS for the second quarter (ended June 2024) to increase 10.6% and 56% year-over-year to $148.64 billion and $1.01, respectively. Moreover, the company surpassed the consensus EPS and revenue estimates in all four trailing quarters, which is impressive.
AMZN’s stock has increased 26% over the past six months and 44.5% over the past year to close the last trading session at $193.02.
AMZN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Sentiment. It also has a B grade for Momentum, Growth, and Quality. Within the B-rated Internet industry, AMZN is ranked #9 out of 53 stocks.
Click here to access additional ratings of AMZN for Value, and Stability.
Walmart Inc. (WMT)
WMT is engaged in the operation of retail, wholesale, other units, and eCommerce worldwide. It operates through three segments: Walmart U.S.; Walmart International; and Sam's Club. The company operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores under Walmart and Walmart Neighborhood Market brands
On June 13, WMT announced private brand transformation of one of its largest and most well-known fashion brands, No Boundaries. The over $2 billion brand for young adults brings customers a modern, relevant and youthful assortment with new fabrication, shapes and styles, all at the same great prices.
During the first quarter that ended April 30, 2024, WMT’s total revenues rose 6% year-over-year to $161.51 billion. Its adjusted operating income grew 13.7% from the year-ago value to $7.09 billion. The company’s consolidated net income attributable to Walmart came in at $5.10 billion and $0.63 per common share, up 205.1% and 200% year-over-year, respectively.
Street expects WMT’s EPS for the second quarter (ending July 2024) to increase 5% year-over-year to $0.64. For the same quarter, the company’s revenue is expected to grow 4.4% year-over-year to $167.27 billion. Also, the company surpassed the consensus revenue and EPS estimates in all four trailing quarters.
WMT’s shares have gained 29.7% over the past six months and 35.6% over the past year to close the last trading session at $69.99.
WMT’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
WMT has an A grade for Sentiment and Stability and a B for Momentum. It is ranked #12 out of 36 stocks in the A-rated Grocery/Big Box Retailers industry.
In addition to the POWR Ratings we’ve stated above, we also have other ratings of WMT for Growth, Value, and Quality. Get all WMT ratings here.
Target Corporation (TGT)
TGT operates as a general merchandise retailer. It provides apparel for women, men, boys, girls, toddlers, and infants and newborns, and jewelry, accessories, and shoes, and beauty and personal care, baby gear, cleaning, paper products, and pet supplies.
On June 24, TGT announced a partnership with Shopify, a global commerce platform to offer a selection of its popular merchants and their products on Target Plus, the retailer’s third-party, highly curated digital marketplace.
The strategic partnership with Shopify would expand TGT through a hand-selected assortment of new and on-trend products and brands like True Classic, Caden Lane, and more, giving consumers even more options to explore at affordable prices and with exceptional quality.
For the first quarter that ended on May 4, 2024, TGT reported total revenue of $24.53 billion and its operating income was $1.30 billion. The company’s net earnings and EPS came in at $942 million and $2.03 for the quarter, respectively.
Furthermore, the company’s cash and cash equivalents stood at $3.60 billion as of May 4, 2024, compared to $1.32 billion as of April 29, 2023.
According to the guidance for the second quarter, TGT expects a 0 to 2 % growth in its comparable sales, and GAAP and adjusted EPS of $1.95 to $2.35. Also, for the full year, the company expect a 0% to 2% increase in its comparable sales, and GAAP and adjusted EPS of $8.60 to $9.60.
Street expects TGT’s revenue and EPS for the second quarter (ending July 2024) to increase 1.7% and 21.7% year-over-year to $25.19 billion and $2.19, respectively. Also, the company has topped the consensus EPS estimate in three of the trailing quarters.
Shares of TGT have surged 9.9% over the past six months and 19.2% over the past year to close the last trading session at $155.01.
TGT’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
TGT has a B grade for Quality, Momentum, and Value. It is ranked #21 out of 36 stocks in the A-rated Grocery/Big Box Retailers industry.
In addition to the POWR Ratings we’ve stated above, we also have TGT ratings for Sentiment, Growth, and Stability. Get all TGT ratings here.
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AMZN shares were trading at $186.75 per share on Wednesday afternoon, down $6.27 (-3.25%). Year-to-date, AMZN has gained 22.91%, versus a 18.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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