Top Retail Stocks for Q4 2021

The retail industry provides a variety of finished goods, both durable and non-durable, to individual consumers and households. The industry also sells services. Products sold by retail companies include apparel, electronics, furniture, kitchenware, sporting goods, books, and toys. Some even sell groceries, pharmaceutical products, auto parts, and gardening supplies. The industry includes traditional brick-and-mortar retailers as well as emerging e-commerce companies. Some of the biggest retail companies include Walmart Inc. (WMT), Amazon.com Inc. (AMZN), and Costco Wholesale Corp. (COST). The earnings and revenue performance of retailers has varied widely during the COVID-19 pandemic. Many heavily focused brick-and-mortar retailers have suffered huge declines, while retailers with a strong e-commerce presence have thrived.

Retail stocks, as represented by the SPDR S&P Retail ETF (XRT), have significantly outperformed the broader market. XRT has provided a total return of 85.9% over the past 12 months, well above the Russell 1000's total return of 37.1%. These market performance numbers and all statistics in the tables below are as of Sept. 10, 2021.

Here are the top 3 retail stocks with the best value, the fastest growth, and the most momentum.

Best Value Retail Stocks

These are the retail stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

^{Source: YCharts}

• Qurate Retail Inc.: Qurate Retail is an e-commerce service provider. The company partners with television networks and e-commerce sites, social media, mobile applications, and similar platforms to provide video and digital commerce services worldwide. Qurate operates brands including QVC, HSN, Zulily, and Frontgate, among others. The company announced in mid-July the appointment of David Rawlinson II as president and chief executive officer (CEO), effective Oct. 1, 2021. Rawlinson, who has extensive leadership experience at various companies, will succeed Mike George.
• Companhia Brasileira De Distribuicao: Companhia Brasileira De Distribuicao is a Brazil-based retail company. It distributes food, clothing, home appliances, electronics, and various other items through its chain of hypermarkets, supermarkets, specialized stores, and department stores.
• eBay Inc.: eBay is an e-commerce company that operates an online marketplace connecting buyers and sellers of new and used items around the world. eBay has about 1.5 billion live listings globally, 19 million sellers, and 159 million active buyers.

Fastest Growing Retail Stocks

These are the top retail stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

^{Source: YCharts}

• Dave & Buster's Entertainment Inc.: Dave & Buster's Entertainment owns and operates high-volume venues that combine entertainment and dining for adults and families throughout North America. Its entertainment centers offer food and beverage items as well as various entertainment attractions centered around playing games and watching live sports and other televised events. Dave & Buster's recently announced financial results for Q2 of its 2021 fiscal year (FY) ended Aug. 1, 2021. The company posted net income of $52.8 million, a significant turnaround from a net loss of $58.6 million in the year-ago quarter. Revenue rose 642.9% YOY. Because the company's EPS went from negative in the year-ago quarter to positive in the most recent quarter, an EPS growth rate could not be calculated for the above table.
• Luckin Coffee Inc.: Luckin Coffee is a China-based holding company primarily engaged in the coffee retail business. Its products include freshly brewed drinks, juices, and light meals, and it operates mainly through mobile apps and pick-up stores. In December 2020, the company was fined $180 million by the U.S. Securities and Exchange Commission (SEC) for "intentionally and materially" overstating its 2019 revenue and understating a net loss. Luckin agreed to pay the fine but did not admit or deny the charges. Months later, in February 2021, the company filed for bankruptcy protection in the U.S. Luckin said that its outlet stores remained open and the Chapter 15 bankruptcy petition was not expected to impact its daily operations. The company reported negative EPS in its most recent quarter, which is why an EPS growth rate could not be calculated for the above table.
• Shift Technologies Inc.: Shift Technologies is an automobile e-commerce platform for buying and selling used cars. Its platform provides services involved in purchasing a used car, including helping customers find a car, organizing a test drive, providing digital payment transactions, and vehicle protection products. The company reported negative EPS in the most recent quarter, which is why an EPS growth rate could not be calculated for the above table.

Retail Stocks with the Most Momentum

These are the retail stocks that had the highest total return over the last 12 months.

^{Source: YCharts. *Exception to normal outlier rule, see company description for details.}

• GameStop Corp.: GameStop operates a chain of electronic game and software stores nationwide. The company sells video game hardware, software, and accessories. GameStop announced in early June the appointment of Amazon.com Inc. (AMZN) executives Matt Furlong as CEO, effective June 21, 2021, and Mike Recupero as chief financial officer (CFO), effective July 12, 2021. Both Furlong and Recupero held senior roles at Amazon overseeing growth initiatives. GameStop has been included in the momentum section as an exception to Investopedia's usual exclusion of companies with 12-month trailing total returns greater than 2,500%. It has been included because the astronomical rise of its stock price has been well-documented and serves as an instructive lesson on the range of factors that can help to drive stock prices, such as bullish commentary, and sometimes banter, on the Reddit forum r/wallstreetbets.
• Destination XL Group Inc.: Destination XL Group is an omni-channel specialty retailer of big and tall men's apparel. The company operates an e-commerce platform as well as retail and outlet stores in the U.S. and Canada.
• Luckin Coffee Inc.: See above for company description.

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