Retailers are adapting their business models as technology changes how people shop. Still, demand can be volatile as the industry is exposed to the ups and downs of consumer spending. This has stirred some uncertainty lately as retail stocks have tumbled by 1.3% over the past six months. This drop was discouraging since the S&P 500 returned 2.5%.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. On that note, here is one resilient consumer stock at the top of our shopping list and two best left ignored.
Two Consumer Retail Stocks to Sell:
Sportsman's Warehouse (SPWH)
Market Cap: $57.43 million
A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ: SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.
Why Should You Dump SPWH?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 35.9% annually, worse than its revenue
Sportsman's Warehouse is trading at $1.48 per share, or 16.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SPWH in your portfolio.
AutoNation (AN)
Market Cap: $6.88 billion
With a vast network of over 300 locations strategically concentrated in America's Sunbelt region, AutoNation (NYSE: AN) operates one of America's largest networks of automotive dealerships, selling new and used vehicles, parts, and services across multiple brands.
Why Do We Pass on AN?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Gross margin of 17.9% is below its competitors, leaving less money for marketing and promotions
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $200.60 per share, AutoNation trades at 9.4x forward P/E. If you’re considering AN for your portfolio, see our FREE research report to learn more.
One Consumer Retail Stock to Watch:
Costco (COST)
Market Cap: $443 billion
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Do We Watch COST?
- Same-store sales growth averaged 6.2% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Massive revenue base of $286.3 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it’s making even more lucrative bets
Costco’s stock price of $999.85 implies a valuation ratio of 48.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 for 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
