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 were flat while the S&P 500 climbed by 9%.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here are two consumer stocks we think can generate sustainable market-beating returns and one we’re passing on.
One Consumer Retail Stock to Sell:
Kohl's (KSS)
Market Cap: $1.96 billion
Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE: KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.
Why Do We Think KSS Will Underperform?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $16.87 per share, Kohl's trades at 12.2x forward P/E. Dive into our free research report to see why there are better opportunities than KSS.
Two Consumer Retail Stocks to Watch:
Boot Barn (BOOT)
Market Cap: $5.31 billion
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE: BOOT) is a western-inspired apparel and footwear retailer.
Why Are We Positive on BOOT?
- Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.3% growth over the past two years
- Free cash flow margin increased by 5.6 percentage points over the last year, giving the company more capital to invest or return to shareholders
Boot Barn’s stock price of $158.07 implies a valuation ratio of 18.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Urban Outfitters (URBN)
Market Cap: $6.63 billion
Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ: URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.
Why Does URBN Stand Out?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Comparable store sales rose by 4.8% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Share buybacks catapulted its annual earnings per share growth to 42.4%, which outperformed its revenue gains over the last three years
Urban Outfitters is trading at $68.28 per share, or 11.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
