Retail stocks for long-term gains

Over the past two years, investors have become familiar with the phrase “stock picker’s market.” The technical definition goes against the advice of “just invest in SPY and forget about it.” This is because a fund tries to replicate the performance of its underlying index. However, in a stock picker’s market, the greatest gains are concentrated in a few stocks.

Retail investors need only look retail Stock to Get a practical example of a stock picker’s market. Heading into 2025, three companies control 17% of all US retail sales. This is up from about 11% in 2024. These companies have a loyal customer base, a strong (or growing) e-commerce presence, and are floating in cash to fuel future growth.

Not surprisingly, each of these stocks comfortably beat the performance of the S&P 500 in 2024, and each looks like it will continue to outperform the market in 2025.

Walmart Inc. NYSE: WMTHas been one of the best performing stocks over the last 12 months, delivering an impressive return of around 72% till January 9, 2025. In the first three quarters of 2024, Walmart delivered revenue that was 5% higher than last year. -year (YoY). And the YoY gain on the bottom line is an even more impressive 14%.

Of course, it’s important to provide context that gives those numbers meaning. In Walmart’s case, it’s not about pricing power but about its ability to attract existing and new customers with everyday low prices. On recent earnings calls, the company noted that high-income consumers are trading up for many discretionary items. Meanwhile, the company’s lower-income consumers may have smaller cars but still rely on Walmart for their staples.

The consumer experience is happening in-store and through the company’s mobile app, increasing the retailer’s stature in the competitive e-commerce space.

Analysts are forecasting 10% earnings growth over the next 12 months and are starting to raise their price targets from the current consensus price of $93.95.

A key bullish argument for ownership Costco Wholesale Corporation Nasdaq: Cost Stock is its business model. When consumers have to pay for the privilege of shopping in your store, they have a reason beyond price to prefer your store.

After raising its membership fee for the first time in seven years in November, Costco continues to prove the model works. The company continues to have a retention rate of over 90%, and this revenue goes directly to the company’s bottom line. Additionally, Costco will realize most of that earnings growth in 2025 and 2026, due to the timing of the fee increase.

COST stock is up nearly 39% in the 12 months ended Jan. 9. However, that includes a roughly 6% decline since the stock hit a high of around $1,007 before reporting earnings in December. Analysts believe the stock will close that gap over the next 12 months, but if they beat the estimated earnings growth of around 9%, you should expect to see COST stock even higher.

Amazon.com Inc. NASDAQ: AMZN Has been an interesting stock over the past few years. The company’s e-commerce business exploded during the Covid-19 pandemic, pushing the company’s cash position to record levels.

Since 2022, the company’s Amazon Web Services business has languished as the e-commerce business has managed a consumer that has faced the twin ends of sticky inflation and generationally high interest rates.

But in 2025, it looks like the company is firing on all cylinders once again. Amazon’s investments in robotics and automation should begin to deliver efficiencies that will show up on the company’s bottom line and free cash flow, which have become areas of emphasis for the company.

AMZN stock is up 46% over the past 12 months. Analysts predict 17% earnings growth, but this is not included in analysts’ price targets.