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7 Retail Stocks to Buy in a Strengthening U.S. Job Market

After such an impressive response in both the market and the economy against serious headwinds, investors may have initially wanted to reduce their exposure to discretionary-focused retail stocks to buy. Basically, lightning might not strike twice. However, the most recent jobs report for December may have reset expectations.

First, the print landed at 216,000 new jobs added last month. In contrast, economists expected only 170,000 positions gained. As well, the unemployment rate held steady at 3.7%. However, experts before the disclosure saw a rise to 3.8%. What does this all translate to? An unexpectedly higher volume of more dollars chasing after fewer goods.

That’s inflationary and that may help drive down the relative value of the dollar. And such a dynamic has a clear impact on retail stocks to buy. Last year, circumstances were difficult for many businesses in part because the personal saving rate increased. And it made sense that it did because a greenback that’s worth more incentivizes savings.

However, a greenback that’s worth less over time? That’s inflationary and that incentives spending. In turn, the below retail stocks to buy offer a compelling argument.

Simon Property Group (SPG)

building facade of simon property group (SPG)Source: Jonathan Weiss /

A questionable enterprise prior to the Covid-19 disaster because of the much-discussed death of America’s shopping malls, Simon Property Group (NYSE:SPG) really took a beating when the SARS-Cov-2 virus first came knocking. Structured as a real estate investment trust (REIT), Simon Property focuses on shopping malls, outlet centers and community/lifestyle centers. During the worst of the pandemic, few people wanted to be around strangers.

However, the concept of retail revenge – or pent-up demand for activities and experiences denied – helped lift SPG from the 2020 doldrums. In the past 52 weeks, SPG gained more than 16% of equity value, a respectable performance. Notably, SPG swung higher as rumors hit that the Federal Reserve was contemplating interest rate cuts. Again, a relatively devalued dollar encourages spending.

To be fair, SPG suffers from question marks due to wider questions about the brick-and-mortar retail model. However, analysts rate shares a moderate buy with a high-side target of $172. Thus, it could be one of the retail stocks to buy.

Target (TGT)

tgt stockSource: Sundry Photography /

One of the top names in the big-box retail space, Target (NYSE:TGT) initially appeared intriguing because of the retail revenge phenomenon. However, management disclosed last year the impact that shoplifting had on profitability. Obviously, that didn’t seem like a particularly encouraging announcement considering wider sensibilities. Basically, Target was communicating that it had little recourse other than to suck it up or close down the most problematic stores.

However, late last year, Target reported a better-than-expected earnings print. As well, the company reported robust results for the Black Friday shopping season. All in all, the big-box retailer demonstrated that despite consumer challenges, shoppers were continuing to visit Target locations. That meant that the company enjoyed some brand power, a not-insignificant advantage in an ultra-competitive cycle.

Financially, Target enjoys a 15.7% three-year revenue growth rate, beating out 83.45% of its peers. Also, its return on invested capital (ROIC) – the ability to convert capital into profitable investments – comes in at 10.5%, better than 75.32% of the sector. Thus, TGT ranks among the retail stocks to buy.

Ulta Beauty (ULTA)

ULTA stock Ulta Beauty store front sign located at Laurel Town Centre in Laurel, Maryland.Source: Ryan P Stephans /

Based in Bolingbrook, Illinois, Ulta Beauty (NASDAQ:ULTA) is a chain of beauty stores. While a relevant sector, a tough economic backdrop hurt investor sentiment. In the past 52 weeks, ULTA shares dipped more than 5%. With high inflation and high borrowing costs, many consumers opted for cheaper alternatives – the trade-down effect. However, if interest rates decline, ULTA could be one of the retail stocks to buy.

For one thing, with more people having more discretionary funds to spend, increased demand for pampering should be expected. Moving forward, we could see Ulta leveraging its on-site beauty salons. As well, consumers may opt for top shelf, higher-margin products. Both may help reinvigorate sentiment. Indeed, ULTA popped higher late last year, coinciding with lower interest rate rumors.

Financially, Ulta performs quite well with a three-year revenue growth rate of 15.7%, beating out almost 77% of its rivals. However, the real star could be the ROIC which clocks in at 31%, above 96% of competitors. Thus, it’s an intriguing prospect for retail stocks to buy.

Starbucks (SBUX)

Learnin' From Luckin, Starbucks Stock Heats Up a StrategySource: monticello /

Another beneficiary of a better-than-expected jobs report could be Starbucks (NASDAQ:SBUX). Practically a cultural icon at this point, Starbucks fuels a large chunk of the U.S. economy. How so? In addition to hiring countless thousands of people – thus providing first-time work experience for many – the brand also keeps workers focused. According to the National Coffee Association of USA, seven in 10 Americans drink coffee every week.

Invariably, a large volume of this consumption stems from Starbucks. Now, the narrative understandably encountered challenges in 2023. You can tell by its 52-week loss of almost 13%. That’s very un-Starbucks like. However, with the dollar rising in relative value due to higher interest rates, people naturally chose to save their greenbacks.

Moving forward, more people should have more dollars from more jobs being worked. That should give increased discretionary purchasing power. Also, because these dollars will be worth less over time, an incentive exists to do something with it.

Why not reward yourself with Starbucks? Analysts see a price target of $110, making SBUX one of the retail stocks to buy.

Amazon (AMZN)

Closeup of the Amazon logo at Amazon campus in Palo Alto, California. The Palo Alto location hosts A9 Search, Amazon Web Services, and Amazon Game Studios teams. AMZN stockSource: Tada Images /

Mentioning Amazon (NASDAQ:AMZN) as one of the retail stocks to buy may be controversial because of its impact. As The New York Times pointed out a few years back, mom-and-pop stores just can’t compete with the e-commerce juggernaut. So, Amazon’s giant vacuum cleaner continues to scour the nation, devastating small businesses and enlarging itself. It’s an ugly situation but you can’t argue with the results.

In the past 52 weeks, AMZN gained nearly 59% of equity value. Yes, it’s still off from its all-time highs. However, the security’s downturn in 2022 appears a forgotten memory. Further, if the Fed actually goes through with interest rate cuts, Amazon may have some more time with blue skies. In an inflationary cycle, more dollars will chase after fewer goods. As stated before, this should incentivize spending.

To be clear, AMZN is no discount, trading at 78.61X trailing-year earnings. However, the company enjoys a massive three-year revenue growth rate of 21.9%. Also, it features a very decent ROIC of 6.84%. Unsurprisingly, it’s a unanimous strong buy among 42 expert voices.

Nike (NKE)

A stack of red Nike (NKE) shoe boxes.Source: mimohe /

During the worst of the pandemic, a few retail stocks to buy offered surprising relevance. One such company was Nike (NYSE:NKE). A popular athletic apparel and sports equipment manufacturer, when enterprises shifted abruptly to remote work protocols, demand for traditional office attire declined. In its place were hoodies and sweatpants and other super-casual attire – things that Nike specializes in.

However, with the Fed’s aggressive monetary policy in 2022, NKE incurred a steep correction. Last year, shares were all over the map. In the past 52 weeks, NKE dropped more than 20% of equity value. Further, the company faces competitive pressures as small rivals aim to take market share in the athletic apparel ecosystem.

Still, for speculators, Nike may deserve a second look because of its brand and pricing power. For example, in the quarter ended November 2023, Nike’s gross margin stood at 44.6%. That was noticeably above the year-ago quarter’s print of 42.89%. This indicates that consumers overall gravitate toward Nike, making it one of the retail stocks to buy.

AutoNation (AN)

Exterior of the Autonation Toyota car dealershipSource: RYO Alexandre /

A contrarian idea among retail stocks to buy, AutoNation (NYSE:AN) undoubtedly presents risks. Yes, a currency that devalues over time incentivizes some action toward it, including spending it. Otherwise, if you hold the cash, you will basically incur a hidden tax. It’s just not a smart thing to do but to buy a car? That doesn’t seem very smart either.

However, the reality is that for many people in the U.S. – particularly those outside of metropolitan areas on the east coast – a personal vehicle is a necessity. That’s one of the reasons many Californians don’t like environmental protocols that attempt to push residents into more sustainable transportation. Having a car is an absolute necessity in many areas because the public transportation system is a joke.

But here’s another, more important factor at play: the cars on our roadways are old. In 2023, the average age of passenger vehicles hit a record 12.5 years. As advanced as reliability statistics have become, mechanical devices always break down.

Combined with possibly lower interest rates, more people may be attracted to replacement vehicles. That should be a sizable boon for AutoNation.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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