Retailers are adapting their business models as technology changes how people shop. But many seem to be moving too slowly as their demand is lagging, causing the industry to underperform the market - over the past six months, retail stocks have shed 6.5%. This performance is a stark contrast from the S&P 500’s 5.3% gain.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here is one consumer stock poised to generate sustainable market-beating returns and two best left ignored.
Two Consumer RetailStocks to Sell:
MarineMax (HZO)
Market Cap: $575.9 million
Appropriately headquartered in Clearwater, Florida, MarineMax (NYSE: HZO) sells boats, yachts, and other marine products.
Why Does HZO Worry Us?
- Store closures are a headwind for growth and suggest it’s rightsizing operations to optimize sales at existing locations
- Subscale operations are evident in its revenue base of $2.42 billion, meaning it has fewer distribution channels than its larger rivals
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
MarineMax is trading at $26.82 per share, or 10.2x forward P/E. Read our free research report to see why you should think twice about including HZO in your portfolio.
Sally Beauty (SBH)
Market Cap: $1.00 billion
Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE: SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.
Why Should You Dump SBH?
- Recent store closures and weak same-store sales point to soft demand and an operational restructuring
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Modest revenue base of $3.70 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
Sally Beauty’s stock price of $9.92 implies a valuation ratio of 5.1x forward P/E. Dive into our free research report to see why there are better opportunities than SBH.
One Consumer Retail Stock to Watch:
Sprouts (SFM)
Market Cap: $16.07 billion
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.
Why Do We Watch SFM?
- Offensive push to build new stores and attack its untapped market opportunities is backed by its same-store sales growth
- Same-store sales growth averaged 6.6% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Market share is on track to rise over the next 12 months as its 11.6% projected revenue growth implies demand will accelerate from its six-year trend
At $164.17 per share, Sprouts trades at 33.8x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
