Retailers are evolving to meet the expectations of modern, tech-savvy shoppers. Still, secular trends are working against their favor as e-commerce continues to take share from brick and mortars. This puts retail stocks in a tough spot, and over the past six months, the industry has pulled back by 1.4%. This drop is a far cry from the S&P 500’s 13% ascent.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one consumer stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Consumer Retail Stocks to Sell:
Best Buy (BBY)
Market Cap: $15.68 billion
With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Are We Cautious About BBY?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 22.4%
- Poor expense management has led to an operating margin of 3.1% that is below the industry average
Best Buy is trading at $74.86 per share, or 11.6x forward P/E. If you’re considering BBY for your portfolio, see our FREE research report to learn more.
National Vision (EYE)
Market Cap: $1.94 billion
Operating under multiple brands, National Vision (NYSE: EYE) sells optical products such as eyeglasses and provides optical services such as eye exams.
Why Does EYE Give Us Pause?
- Recent store closures reflect a shift toward streamlining existing locations to maximize efficiency
- Operating margin of 0.8% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
National Vision’s stock price of $25.02 implies a valuation ratio of 28.5x forward P/E. Read our free research report to see why you should think twice about including EYE in your portfolio.
One Consumer Retail Stock to Watch:
Tractor Supply (TSCO)
Market Cap: $28.36 billion
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ: TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Why Do We Like TSCO?
- Fast expansion of new stores indicates an aggressive approach to attacking untapped market opportunities
- Free cash flow margin expanded by 2.6 percentage points over the last year, providing additional flexibility for investments and share buybacks/dividends
- ROIC punches in at 32.7%, illustrating management’s expertise in identifying profitable investments
At $53.68 per share, Tractor Supply trades at 24.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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
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