The retail industry is undergoing significant change, driven by the rise of e-commerce, mobile commerce, and data-driven insights. Therefore, investors could consider buying solid retail stocks Walmart Inc. (WMT), Alibaba Group Holding Limited (BABA), and PriceSmart, Inc. (PSMT), which are strategically positioned to excel in the evolving digital landscape.

As the retail sector embraces digital transformation, companies are innovating to meet changing consumer demands and technological advancements. Retailers are adopting technologies like artificial intelligence, data analytics, and personalized marketing to enhance customer experiences and boost sales. The shift toward omnichannel retailing has further blurred the lines between online and offline shopping, catering to the growing demand for convenience and efficiency.

Retail sales rose 0.7% in November, driven by a 2.6% jump at auto dealers, reflecting hurricane recovery demand and dealer incentives. Robust spending highlights steady economic growth despite high interest rates, which may prompt the Federal Reserve to ease rate cuts more gradually.

Furthermore, the global retail market is projected to touch $50.86 trillion by 2030, expanding at a CAGR of 7.7%.

Considering these positive developments, let’s delve deeper into retail stocks:

Walmart Inc. (WMT)

WMT is a global retailer offering groceries, health products, electronics, apparel, and financial services through physical stores and eCommerce platforms. It operates under Walmart, Sam’s Club, and private brands like Allswell and Equate.

On December 3, WMT completed its acquisition of VIZIO, marking a significant expansion into the consumer electronics market.

It pays an annual dividend of $0.83, which translates to a dividend yield of 0.93% at the prevailing price levels.

WMT’s total revenue increased 5.5% year-over-year to $169.59 billion in the fiscal 2024 third quarter that ended on October 31, 2024. Its adjusted operating income came in at $21.74 billion, up 9.5% year-over-year. Its net income came in at $4.71 million, up 633.1% year-over-year, while its adjusted EPS grew 13.7% from the year-ago value to $0.58.

Street expects WMT’s revenue for the fiscal third quarter (ending January 2025) to increase 4% year-over-year to $178.74 billion. Its EPS for the same quarter is expected to grow 6.8% from the prior year to $0.64. In addition, it surpassed the consensus revenue estimates in each of the trailing four quarters.

Shares of WMT have gained 69.5% over the past year and 32.2% over the past six months to close the last trading session at $90.

WMT’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has an A grade in Stability and Sentiment and a B for Momentum. Within the same industry, it is ranked #14 out of 37 stocks in the A-rated Grocery/Big Box Retailers industry.

Click here to see WMT’s ratings for Growth, Value, and Quality.

Alibaba Group Holding Limited (BABA)

BABA, headquartered in Hangzhou, China, offers a wide range of products and services, including e-commerce platforms (Taobao, Tmall), logistics (Cainiao), cloud computing, digital media (Youku), and business efficiency tools (DingTalk). The company also provides wholesale marketplaces, on-demand delivery, and smart hardware like Tmall Genie.

On November 28, BABA announced the successful completion of a $2.65 billion offering of U.S. dollar-denominated senior unsecured notes on November 26. The offering underscores Alibaba’s strategic financial initiatives to bolster its operational and growth plans.

The company pays an annual dividend of $ 2, which translates to a dividend yield of 2.36% at the prevailing price levels.

In the fiscal second quarter ended September 30, 2024, BABA’s revenues increased marginally year-over-year to RMB236.50 million ($32.40 million). Its income from operations was RMB35.25 million ($4.83 million), up marginally from the year-ago value. Moreover, its non-GAAP net income and non-GAAP earnings per ADS stood at RMB36.52 million ($5 million) and RMB15.06 ($2.06), respectively.

Analysts expect BABA’s revenue and EPS for the third quarter ending December 31, 2024, to increase 6.3% and 3.9% year-over-year to $ 38.47 billion and $2.74, respectively.

The stock climbed 15.3% over the past six months and has returned 13.6% over the past year to close the last trading session at $84.95.

BABA’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has a B grade for Growth, Momentum, Sentiment, and Quality. It is ranked #9 out of 43 stocks in the A-rated China industry.

To access BABA’s Value and Stability ratings, click here.

PriceSmart, Inc. (PSMT)

PSMT based in the U.S., runs membership warehouse clubs in the Americas and the Caribbean. It offers groceries, electronics, home goods, private-label products, health services, and e-commerce with curbside pickup and delivery.

It pays an annual dividend of $1.16, which translates to a dividend yield of 1.26% at the prevailing price levels.

PSMT’s total revenues increased 9.8% year-over-year to $ 1.23 billion in the fiscal fourth quarter that ended on August 31, 2024. Its operating income was $ 49.20 million, up 53.1% from the year-ago value. Its adjusted net income came in at $29.07 million, up 42.8% over the prior-year quarter. Its adjusted net income per share grew 44.6% from the year-ago value to $0.94.

Street expects PSMT’s revenue for the fiscal first quarter (ending November 30, 2024) to increase 6.3% year-over-year to $ 1.24 billion. Its EPS for the same quarter is expected to grow 9.7% from the prior year to $1.36. In addition, it surpassed the consensus revenue estimates in all of the trailing four quarters.

Shares of PSMT have gained 23.3% over the past year and 16.7% over the past six months to close the last trading session at $92.91.

PSMT’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has an A grade for Growth and a B for Value, Momentum, and Stability. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #24 out of 37.

Click here to see PSMT’s ratings for Sentiment and Quality.

What To Do Next?

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WMT shares rose $0.14 (+0.16%) in premarket trading Friday. Year-to-date, WMT has declined -0.28%, versus a 0.10% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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