Retailers are overhauling their operations as technology redefines the shopping experience. Still, secular trends are working against them as e-commerce continues to take share from brick-and-mortar stores. This puts retail stocks in a tough spot, and over the past six months, the industry’s 1.6% gain has trailed the S&P 500 by 14.7 percentage points.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one consumer stock boasting a durable advantage and two we would avoid.
Two Consumer Retail Stocks to Sell:
Tilly's (TLYS)
Market Cap: $138.3 million
With an emphasis on skate and surf culture, Tilly’s (NYSE: TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults.
Why Are We Out on TLYS?
- Reduction in its number of stores signals a focus on profitability through targeted consolidation
- Persistent operating margin losses suggest the business manages its expenses poorly
Tilly’s stock price of $4.52 implies a valuation ratio of 35.6x forward P/E. Dive into our free research report to see why there are better opportunities than TLYS.
Tractor Supply (TSCO)
Market Cap: $16.53 billion
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ: TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Why Do We Think Twice About TSCO?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.2% for the last three years
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Free cash flow margin dropped by 3.5 percentage points over the last year, implying the company became more capital intensive as competition picked up
At $31.73 per share, Tractor Supply trades at 15.9x forward P/E. If you’re considering TSCO for your portfolio, see our FREE research report to learn more.
One Consumer Retail Stock to Buy:
Ross Stores (ROST)
Market Cap: $74.78 billion
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ: ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
What Makes ROST Stand Out?
- New store openings and solid same-store sales performance have boosted its top-line growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.1% growth over the past two years
- Industry-leading 30.6% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
Ross Stores is trading at $234.39 per share, or 27.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
