Best Retail Stocks To Buy Now

Key Insights

• Investors are searching for safe-haven assets, and retail stocks may benefit from this trend. 
• Some retail stocks, like Walmart and Dollar Tree, have already shown strong performance at the start of this year. 
• Other retail stocks, like Home Depot, have suffered a pullback and returned to cheaper valuation levels. 

S&P 500 gained strong downside momentum in the recent trading sessions as the market reacted to hawkish comments from the Fed. Not surprisingly, investors are searching for safe-haven assets in the rising interest rate environment, and retail stocks have a good chance to benefit from this trend.

Walmart

Shares of Walmart had a strong start of this year and are up by about 10% year-to-date. Analyst estimates have improved in recent months, and the company is expected to report earnings of $6.76 per share in the current fiscal year.

In the next fiscal year, Walmart is projected to report earnings of $7.28 per share, so the stock is trading at 22 forward P/E. This is not cheap for a retailer, but investors are willing to pay a premium as the company has reported strong performance in recent quarters.

Dollar Tree

Dollar Tree developed strong upside momentum in 2022, but the stock is still valued at less than 19 forward P/E.

Shares of Dollar Tree have clearly benefited from the rush into potential safe-haven assets amid high inflation and rising yields, and they have a good chance to continue the current upside trend.

Home Depot

Unlike Walmart and Dollar Tree, shares of Home Depot had a challenging start of this year. Currently, Home Depot is down by more than 25% year-to-date.

Analyst estimates have moved a bit lower in recent months. The company is expected to report earnings of $16.1 per share in the current year and earnings of $17.31 per share in the next year, so the stock is trading at less than 18 forward P/E.

At such levels, the stock may attract more traders who are willing to initiate positions in this market segment.

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