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Invest in These 5 Hot Retail Disruptors

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  • (0:30) - Its Not All About Amazon: Retail Disrupters 
  • (2:45) - The Netflix of Fashion: Stitch Fix
  • (8:25) - Macy’s Making a Comeback
  • (13:45) - Specialty Retail: Urban Outfitters
  • (21:00) - Furniture Retail: RH & Williams Sonoma 
  • (29:50) - American Eagle Outfitters
  • (35:00) - Episode Roundup: SFIX, M, URBN, WSM, RH, AEO
  • Podcast@Zacks.com

Welcome to Episode #134 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Madeline Johnson, Editor at Zacks.com, to discuss one of their favorite topics: the retail stocks.

Remember how Amazon was supposedly going to put all the retailers out of business so that the only place people would shop would be on Amazon.com?

Not so much.

Retail stocks bottomed in 2017 and have been on a turnaround ever since.

Not All Retailers are Created the Same

However, there are still winners and losers in the retail space.

How and where people shop is changing. Only the most agile and visionary retailers are able to navigate the new trends.

Many of those retailers are taking risks in their business.

Those are the retailers that investors want to own.

5 Hot Retail Stocks to Put on Your Short List

1.       Stitch Fix (SFIX - Free Report) delivers clothes to customers which they can either buy or ship back. In the third quarter, active clients rose 30% to 2.7 million. It’s a growth stock, though, with a forward P/E of 119.

2.       Macy’s (M - Free Report) has come back from the dead as exclusive products such as Donna Karan are driving sales. It’s still cheap with a forward P/E of 10.

3.       Urban Outfitters (URBN - Free Report) was mocked for buying a pizza chain a few years ago but it recently opened a Terrain Café in Palo Alto, joining the list of retailers who are adding hospitality with success. Urban’s shares have spiked but still trade with a forward P/E of just 19.

4.       RH (RH - Free Report) had a rough 2016 after expanding its furniture business to include RH Modern and RH Teen. But the hot global economy is boosting it in 2018 as it has raised full year guidance twice. Its combination of furniture and hospitality appears to be working to boost sales. It’s looking to open galleries in London and Paris in the near future.

5.       Williams-Sonoma (WSM - Free Report) is also making a play into hospitality as it intends to open 6 West Elm branded hotels by 2019. It’s also seen a rebound in its Williams-Sonoma flagship brand thanks to a newly launched furniture line. Williams-Sonoma trades with a forward P/E of just 14.

Who else is taking risks in its business?

Which retailers are opening stores instead of closing them?

Who should you own for the new retail reality?

Get the answers to all of this and more on this week’s podcast.

[In full disclosure, the author of this article owns shares of RH and WSM in her personal portfolio.]

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

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