Retailers are evolving to meet the expectations of modern, tech-savvy shoppers. Still, secular trends are working against them as e-commerce continues to take share from brick-and-mortar stores. This puts retail stocks in a tough spot, and over the past six months, the industry’s 3.5% gain has trailed the S&P 500 by 9.8 percentage points.
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 resilient consumer stock at the top of our shopping list and two we would avoid.
Two Consumer Retail Stocks to Sell:
BJ's (BJ)
Market Cap: $11.56 billion
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Do We Think Twice About BJ?
- The company has faced growth challenges as its 5.5% annual revenue increases over the last three years fell short of other consumer retail companies
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.4% that must be offset through higher volumes
- Subpar operating margin of 3.9% constrains its ability to invest in process improvements or effectively respond to new competitive threats
At $91.50 per share, BJ's trades at 18.5x forward P/E. Read our free research report to see why you should think twice about including BJ in your portfolio.
Genuine Parts (GPC)
Market Cap: $18.43 billion
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Is GPC Not Exciting?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.1% for the last three years
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Operating margin of 4.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
Genuine Parts is trading at $132.14 per share, or 16.7x forward P/E. To fully understand why you should be careful with GPC, check out our full research report (it’s free).
One Consumer Retail Stock to Watch:
Lululemon (LULU)
Market Cap: $10.96 billion
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Does LULU Stand Out?
- Rapidly increasing store base reflects a desire to sell in new markets and scale quickly
- Its collection of products is difficult to replicate at scale and results in a best-in-class gross margin of 57%
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 20.3%
Lululemon’s stock price of $99.01 implies a valuation ratio of 11.6x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
