Retailers are evolving to meet the expectations of modern, tech-savvy shoppers. 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 12%.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here is one consumer stock poised to generate sustainable market-beating returns and two we’re steering clear of.
Two Consumer Retail Stocks to Sell:
Monro (MNRO)
Market Cap: $436.8 million
Started as a single location in Rochester, New York, Monro (NASDAQ: MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Why Do We Steer Clear of MNRO?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Earnings per share have dipped by 54.2% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Monro is trading at $13.97 per share, or 60.2x forward P/E. If you’re considering MNRO for your portfolio, see our FREE research report to learn more.
Albertsons (ACI)
Market Cap: $6.17 billion
With over 20 well-known grocery banners spanning 34 states, Albertsons (NYSE: ACI) operates food and drug retail stores across the US, offering groceries, pharmacy services, and own-brand products under banners like Safeway, Jewel-Osco, and Vons.
Why Do We Pass on ACI?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 27.2% that must be offset through higher volumes
- Poor expense management has led to an operating margin of 1.2% that is below the industry average
Albertsons’s stock price of $12.68 implies a valuation ratio of 7.2x forward P/E. To fully understand why you should be careful with ACI, check out our full research report (it’s free).
One Consumer Retail Stock to Buy:
AutoZone (AZO)
Market Cap: $46.79 billion
Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE: AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.
Why Are We Bullish on AZO?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Same-store sales growth averaged 3.4% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Excellent operating margin of 18.7% highlights the efficiency of its business model
At $2,897 per share, AutoZone trades at 17.1x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
