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Retail Winners for 2026: 4 Stocks Investors Should Buy Now
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Key Takeaways
Ulta, AEO, Gap and Five Below are highlighted as top retail stock picks amid improving sector conditions.
FIVE and AEO show strong traffic and brand growth via merchandising, digital marketing and store upgrades.
GAP and ULTA drive momentum through supply-chain upgrades, exclusivity and strategic partnerships.
After a volatile year marked by inflation, tariff uncertainty, high borrowing costs, and cautious consumer spending, the broader retail sector has entered 2026 with a more constructive setup. While shoppers remain value-conscious, easing inflation in key categories, stabilizing supply chains, and gradual normalization in freight and input costs are improving operational conditions for retailers. Importantly, the Fed has begun cautiously cutting interest rates after an extended period of restrictive policy.
However, consumer behavior remains uneven. Higher-income shoppers continue to spend selectively on premium categories, while price-sensitive households gravitate toward discounts, private labels and everyday essentials. This divergence is shaping demand across the retail landscape. Companies with well-integrated pricing, loyalty programs, merchandising and an omnichannel ecosystem are better positioned to drive traffic without sacrificing margins.
While stores remain the dominant shopping and fulfillment channel, sustained e-commerce growth, supported by faster delivery, improved app interfaces and the integration of AI-driven recommendations, remains crucial for success. Companies investing in online shopping experiences, along with effective last-mile delivery, are likely to attract a larger customer base. The combination of physical and digital channels — such as click-and-collect options and curbside pickups — provides a competitive advantage, as consumers seek convenience and flexibility.
For investors, this backdrop makes stock selection in 2026 less about broad sector exposure and more about identifying retailers with structural advantages. The best opportunities should come from retailers that combine steady demand drivers with brand strength, operational efficiency and a proven ability to adapt to shifting shopping behavior. Against that backdrop, here are four retail stocks investors should consider buying: Five Below, Inc. (FIVE - Free Report) , American Eagle Outfitters, Inc. (AEO - Free Report) , The Gap, Inc. (GAP - Free Report) and Ulta Beauty, Inc. (ULTA - Free Report) .
Past Year Performance of FIVE, AEO, GAP & ULTA
Image Source: Zacks Investment Research
4 Prominent Picks for 2026
Five Below: Value-Led Model Driving Traffic and Loyalty
Five Below continues to strengthen its position as a leading value retailer, offering a trend-focused product assortment that strongly appeals to its core demographic of teens and tweens. Management noted consistent increases in foot traffic, driven by engaging merchandising, frequent product updates and a treasure-hunt shopping experience that encourages repeat visits. Operational innovations, such as the use of AI for inventory management and a shift toward creator-led social media marketing, have generated significant traffic growth and enhanced customer engagement. Supported by a strong pace of new store openings and steady momentum across all household income groups, the brand demonstrates notable resilience and gains in market share.
The Zacks Consensus Estimate for Five Below’s current and next financial-year sales implies growth of 19.6% and 8.9%, respectively, from the year-ago period. This Zacks #1 Ranked (Strong Buy) company has a trailing four-quarter earnings surprise of 62.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
American Eagle: Revitalizing Brands and Driving Growth
American Eagle is demonstrating a powerful turnaround driven by the exceptional performance of its Aerie and OFFLINE brands, which continue to capture significant market share. The company's strategic pivot toward high-impact marketing campaigns and high-profile collaborations has successfully revitalized brand desirability, leading to accelerated traffic and strong customer acquisition across all digital and physical channels. Operational resilience is evident through a disciplined focus on inventory management, cost efficiencies and a modernized store remodeling program that elevates the overall shopping experience. By leveraging its dominance in core categories like denim while aggressively expanding into lifestyle segments such as activewear and sleep, the company is effectively broadening its reach across diverse consumer cohorts.
The Zacks Consensus Estimate for American Eagle’s current and next financial-year sales calls for growth of 2.4% and 2.6%, respectively, from the year-ago period. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 35.1%, on average.
Image Source: Zacks Investment Research
Gap: Brand Reinvigoration Strengthens the Portfolio
Gap is showcasing a powerful operational turnaround boosted by the successful execution of its brand reinvigoration playbook. The company is leveraging high-impact marketing and culturally relevant strategic partnerships, such as the viral "Better in Denim" campaign and designer collaborations, to attract younger demographics while maintaining core customer loyalty. Operational strengths, including a modernized supply chain integrated with AI and automation, are driving significant productivity gains and providing the agility needed to mitigate external headwinds. With a sharpened focus on "must-win" categories like denim, active, and kids and baby, alongside a thoughtful expansion into the beauty sector, the company is effectively broadening its market reach and revenue potential.
The Zacks Consensus Estimate for Gap’s current and next financial-year sales implies growth of 1.8% and 2.4%, respectively, from the year-ago period. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 19.1%, on average.
Image Source: Zacks Investment Research
Ulta Beauty: Loyalty and Exclusivity Power Beauty Leadership
Ulta Beauty is demonstrating powerful momentum through its "Ulta Beauty Unleashed" strategy, consistently delivering performance that exceeds expectations across all major categories and channels. The company's unique "low-to-luxury" brand assortment is a significant competitive advantage, bolstered by successful exclusive launches and a rapidly expanding K-beauty portfolio that resonates with younger demographics. Strategic initiatives are fueling growth, including the successful launch of a new digital marketplace and aggressive international expansion into Mexico and the Middle East. Furthermore, Ulta is driving operational excellence by modernizing its supply chain with advanced automation and leveraging its record-breaking loyalty program to deepen customer engagement and personalization.
The Zacks Consensus Estimate for Ulta Beauty’s current and next financial-year sales indicates growth of 8.7% and 5.8%, respectively, from the year-ago period. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 15.7%, on average.
Image Source: Zacks Investment Research
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Retail Winners for 2026: 4 Stocks Investors Should Buy Now
Key Takeaways
After a volatile year marked by inflation, tariff uncertainty, high borrowing costs, and cautious consumer spending, the broader retail sector has entered 2026 with a more constructive setup. While shoppers remain value-conscious, easing inflation in key categories, stabilizing supply chains, and gradual normalization in freight and input costs are improving operational conditions for retailers. Importantly, the Fed has begun cautiously cutting interest rates after an extended period of restrictive policy.
However, consumer behavior remains uneven. Higher-income shoppers continue to spend selectively on premium categories, while price-sensitive households gravitate toward discounts, private labels and everyday essentials. This divergence is shaping demand across the retail landscape. Companies with well-integrated pricing, loyalty programs, merchandising and an omnichannel ecosystem are better positioned to drive traffic without sacrificing margins.
While stores remain the dominant shopping and fulfillment channel, sustained e-commerce growth, supported by faster delivery, improved app interfaces and the integration of AI-driven recommendations, remains crucial for success. Companies investing in online shopping experiences, along with effective last-mile delivery, are likely to attract a larger customer base. The combination of physical and digital channels — such as click-and-collect options and curbside pickups — provides a competitive advantage, as consumers seek convenience and flexibility.
For investors, this backdrop makes stock selection in 2026 less about broad sector exposure and more about identifying retailers with structural advantages. The best opportunities should come from retailers that combine steady demand drivers with brand strength, operational efficiency and a proven ability to adapt to shifting shopping behavior. Against that backdrop, here are four retail stocks investors should consider buying: Five Below, Inc. (FIVE - Free Report) , American Eagle Outfitters, Inc. (AEO - Free Report) , The Gap, Inc. (GAP - Free Report) and Ulta Beauty, Inc. (ULTA - Free Report) .
Past Year Performance of FIVE, AEO, GAP & ULTA
Image Source: Zacks Investment Research
4 Prominent Picks for 2026
Five Below: Value-Led Model Driving Traffic and Loyalty
Five Below continues to strengthen its position as a leading value retailer, offering a trend-focused product assortment that strongly appeals to its core demographic of teens and tweens. Management noted consistent increases in foot traffic, driven by engaging merchandising, frequent product updates and a treasure-hunt shopping experience that encourages repeat visits. Operational innovations, such as the use of AI for inventory management and a shift toward creator-led social media marketing, have generated significant traffic growth and enhanced customer engagement. Supported by a strong pace of new store openings and steady momentum across all household income groups, the brand demonstrates notable resilience and gains in market share.
The Zacks Consensus Estimate for Five Below’s current and next financial-year sales implies growth of 19.6% and 8.9%, respectively, from the year-ago period. This Zacks #1 Ranked (Strong Buy) company has a trailing four-quarter earnings surprise of 62.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
American Eagle: Revitalizing Brands and Driving Growth
American Eagle is demonstrating a powerful turnaround driven by the exceptional performance of its Aerie and OFFLINE brands, which continue to capture significant market share. The company's strategic pivot toward high-impact marketing campaigns and high-profile collaborations has successfully revitalized brand desirability, leading to accelerated traffic and strong customer acquisition across all digital and physical channels. Operational resilience is evident through a disciplined focus on inventory management, cost efficiencies and a modernized store remodeling program that elevates the overall shopping experience. By leveraging its dominance in core categories like denim while aggressively expanding into lifestyle segments such as activewear and sleep, the company is effectively broadening its reach across diverse consumer cohorts.
The Zacks Consensus Estimate for American Eagle’s current and next financial-year sales calls for growth of 2.4% and 2.6%, respectively, from the year-ago period. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 35.1%, on average.
Image Source: Zacks Investment Research
Gap: Brand Reinvigoration Strengthens the Portfolio
Gap is showcasing a powerful operational turnaround boosted by the successful execution of its brand reinvigoration playbook. The company is leveraging high-impact marketing and culturally relevant strategic partnerships, such as the viral "Better in Denim" campaign and designer collaborations, to attract younger demographics while maintaining core customer loyalty. Operational strengths, including a modernized supply chain integrated with AI and automation, are driving significant productivity gains and providing the agility needed to mitigate external headwinds. With a sharpened focus on "must-win" categories like denim, active, and kids and baby, alongside a thoughtful expansion into the beauty sector, the company is effectively broadening its market reach and revenue potential.
The Zacks Consensus Estimate for Gap’s current and next financial-year sales implies growth of 1.8% and 2.4%, respectively, from the year-ago period. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 19.1%, on average.
Image Source: Zacks Investment Research
Ulta Beauty: Loyalty and Exclusivity Power Beauty Leadership
Ulta Beauty is demonstrating powerful momentum through its "Ulta Beauty Unleashed" strategy, consistently delivering performance that exceeds expectations across all major categories and channels. The company's unique "low-to-luxury" brand assortment is a significant competitive advantage, bolstered by successful exclusive launches and a rapidly expanding K-beauty portfolio that resonates with younger demographics. Strategic initiatives are fueling growth, including the successful launch of a new digital marketplace and aggressive international expansion into Mexico and the Middle East. Furthermore, Ulta is driving operational excellence by modernizing its supply chain with advanced automation and leveraging its record-breaking loyalty program to deepen customer engagement and personalization.
The Zacks Consensus Estimate for Ulta Beauty’s current and next financial-year sales indicates growth of 8.7% and 5.8%, respectively, from the year-ago period. This Zacks Rank #1 company has a trailing four-quarter earnings surprise of 15.7%, on average.
Image Source: Zacks Investment Research