Best Retail Stocks To Buy In May

Key Insights

• Traders stay focused on finding safe-haven plays as S&P 500 is testing yearly lows. 
• Leading retail stocks received strong support this year. 
• Analyst estimates for Walmart and Dollar Tree remain stable, making the stocks more attractive after the recent pullback. 

Some retail stocks continue to outperform the market. While S&P 500 is down by more than 15% year-to-date, Walmart and Dollar Tree gained ground in 2022 as traders viewed them as safe-haven plays.

Walmart

Analyst estimates for Walmart have been mostly stable in recent months. The company is expected to report earnings of $6.76 per share in the current fiscal year and $7.27 per share in the next year, so the stock is trading at roughly 20 forward P/E.

This is not cheap, but traders are ready to pay a premium for safety. Traders will soon have a chance to evaluate whether this premium is justified as Walmart will report its earnings on May 17.

Walmart is expected to report revenue of $138.8 billion and earnings of $1.47 per share. At this point, it looks that meeting this forecast would be sufficient enough to provide some support to the stock.

Dollar Tree

While analyst estimates for Walmart have stagnated in recent months, earnings estimates for Dollar Tree have moved a bit higher. The company is expected to report earnings of $8.00 per share in the current year and earnings of $8.97 per share in the next year, so the stock is trading at 18 forward P/E.

The recent earnings reports exceeded analyst estimates and provided significant support to Dollar Tree stock, which managed to gain strong upside momentum despite the weakness in the general market.

Dollar Tree has recently pulled back from highs, and this pullback could attract traders who are willing to increase their exposure to retail stocks.

For a look at all of today’s economic events, check out our economic calendar.