2 Retail Stocks That Are Worth the Risk in 2023

NASDAQ: ULTA | Ulta Beauty Inc. News, Ratings, and Charts

ULTA – Retail sales came in higher-than-expected last month despite the stubbornly high inflation. Moreover, the rising use of advanced technologies is driving the retail industry’s growth. Therefore, we think fundamentally sound retail stocks Ulta Beauty (ULTA) and TravelCenters of America (TA) could be worth the risk in 2023. Keep reading…

Inflation continues to be higher than the Fed’s target levels. However, despite the soaring prices, consumer spending remained pretty strong. According to the Commerce Department, retail sales rose 3% in January, beating the 1.9% Dow Jones estimate.

Joel Naroff, president of Naroff Economics LLC, said, “Consumers are in pretty decent shape.” He further added, “When people are comfortable in their job situation, that translates into consumer spending.”

Moreover, with the rapid expansion of retail outlets, the retail industry continues to grow. Also, the growing use of technologies like Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), and the Internet of Things (IoT) to improve operating capabilities and enhance the shopping experience is helping the market grow.

According to Contrive Datum Insights, the global smart retail market is expected to grow at a CAGR of 21% until 2030.

Given the backdrop, we think fundamentally sound retail stocks Ulta Beauty, Inc. (ULTA) and TravelCenters of America Inc. (TA) could be ideal buys in 2023, despite macro uncertainties.

Ulta Beauty, Inc. (ULTA)

ULTA operates as a retailer of beauty products. The company employs around 1,308 retail stores across 50 states and distributes its products through its website, ulta.com, and mobile applications.

ULTA’s gross profit margin of 43.75% is 23.8% higher than the 35.33% industry average, while its EBITDA margin of 18.61% is 67.8% higher than the industry average of 11.09%.

ULTA’s net sales increased 17.2% year-over-year to $2.34 billion for the fiscal 2023 third quarter ended October 29, 2022. Its gross came in at $962.82 million, up 22% year-over-year. The company’s net income increased 27.5% year-over-year to $274.59 million, while its EPS stood at $5.34, a 35.6% increase from the year-ago value.

Analysts expect ULTA’s revenue to increase 15.7% year-over-year to $9.99 billion in 2023. Its EPS is estimated to increase 27.3% year-over-year to $22.89 in 2023. It has surpassed EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 39.3% to close the last trading session at $531.56.

ULTA’s POWR Ratings reflect its strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Quality and a B for Sentiment. Within the Specialty Retailers industry, it ranked #15 of 45 stocks. To see additional POWR ratings for Stability, Growth, Value, and Momentum for ULTA, click here.

TravelCenters of America Inc. (TA)

TA operates travel centers, truck service facilities, and restaurants in the United States and Canada. It offers diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking, and other services.

On January 30, 2023, TA announced an agreement with Electrify America to provide electric vehicle charging at certain TA/Petro locations, with the first stations set to open in 2023.

Also, on January 12, 2023, TA, Petro Stopping Centers, and TA Express travel center brands signed 30 new franchise agreements in 2022, exceeding their annual objective. The company remains focused on franchising for accelerated network growth and continues to witness year-over-year franchise signing increases.

TA aims to add 20 franchised stores in 2023, with three new franchised locations opening in 2022.

TA’s forward EV/Sales of 0.28x is 77.3% lower than the industry average of 1.23x. Its forward Price/Sales multiple of 0.12 is 88.1% lower than the industry average of 0.96.

TA’s ROCE of 16.67% is 333.6% higher than the 12.47% industry average.

TA’s total revenues came in at $2.81 billion for the third quarter that ended September 30, 2022, up 44.9% year-over-year. Its net income increased 66.5% year-over-year to $36.98 million. In addition, its EPS increased 63.8% year-over-year to $2.49.

TA’s revenue is expected to increase 5.9% to $2.43 billion for the quarter ending March 2023. Its EPS is estimated to increase by 5% per annum for the next five years. It has surpassed EPS estimates in three of four trailing quarters. Over the past nine months, the stock has gained 132.3% to close the last trading session at $84.43.

TA’s overall B rating equates to a Buy in our POWR Ratings system. It has an A grade for Value and Growth. It is ranked #2 in the same industry.

We’ve also rated TA for Momentum, Sentiment, Stability, and Quality. Get all TA ratings here.

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

  • Why it’s still a bear market
  • How low stocks will go
  • 9 simple trades to profit on the way down
  • Bonus: 2 trades with 100%+ upside when the bull market returns

You owe it to yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 >

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


ULTA shares were trading at $529.99 per share on Friday morning, down $1.57 (-0.30%). Year-to-date, ULTA has gained 12.99%, versus a 5.78% rise in the benchmark S&P 500 index during the same period.


About the Author: Rashmi Kumari


Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
ULTAGet RatingGet RatingGet Rating
TAGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors: Are You Ready for November?

The S&P 500 (SPY) tumbled to end October. Is that a harbinger of more downside to come? Or will the bull market return with gusto? Investment pro Steve Reitmeister shares his time market views including a preview of his favorite stocks. Get the full story below...

3 Cybersecurity Stocks Defending Against Digital Threats

The demand for cybersecurity solutions is rising as digital threats and sophisticated cyberattacks continue to escalate. Therefore, it might be wise to keep track of cybersecurity stocks, CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT), as they offer innovative solutions presenting further growth opportunities. Continue reading...

3 Oil Stocks With High Upside as Global Demand Rebounds

The outlook for oil demand growth appears promising despite economic uncertainties and worldwide supply deficit. Amid this, investing in quality oil stocks Enterprise Products Partners (EPD), Marathon Oil (MRO), and Plains All American Pipeline (PAA) could be ideal as global demand rebounds. Read more...

3 Tech Stocks Under $10 That Could Deliver Big Gains

The technology industry is booming, driven by breakthroughs and significant government investments. Thus, incorporating affordable tech stocks, Sprinklr (CXM), Sabre Corporation (SABR), and Cricut (CRCT) into your portfolio provides an accessible entry point to capitalize on the industry’s growth. Read more…

2 Concerns for Investors in October

The S&P 500 (SPY) may be touching all time highs...but recent action points to concerns on 2 fronts: inflation and earnings. Investment veteran Steve Reitmeister shares his views on these 2 timely topics along with a preview of his top stocks to buy now.

Read More Stories

More Ulta Beauty Inc. (ULTA) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ULTA News