Retailers are overhauling their operations as technology redefines the shopping experience. Still, demand can be volatile as the industry is exposed to the ups and downs of consumer spending. This has stirred some uncertainty lately as retail stocks have lagged the market over the past six months, posting a return of 2.8% compared to 8.9% for the S&P 500.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here are two consumer stocks boasting durable advantages and one that may face trouble.
One Consumer Retail Stock to Sell:
Floor And Decor (FND)
Market Cap: $5.81 billion
Operating large, warehouse-style stores, Floor & Decor (NYSE: FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.
Why Should You Dump FND?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Incremental sales over the last three years were much less profitable as its earnings per share fell by 12.9% annually while its revenue grew
- ROIC of 8% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
At $53.00 per share, Floor And Decor trades at 25.1x forward P/E. If you’re considering FND for your portfolio, see our FREE research report to learn more.
Two Consumer Retail Stocks to Watch:
Costco (COST)
Market Cap: $432.7 billion
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Should COST Be on Your Watchlist?
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 6.6% over the past two years
- Unparalleled revenue scale of $293.6 billion offsets its poor gross margin and gives it advantageous pricing and terms with suppliers
- ROIC punches in at 35%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities
Costco is trading at $951.95 per share, or 44.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Ulta (ULTA)
Market Cap: $20.48 billion
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Are We Positive on ULTA?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Same-store sales growth averaged 3.5% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Industry-leading 32.6% return on capital demonstrates management’s skill in finding high-return investments
Ulta’s stock price of $455.50 implies a valuation ratio of 15.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
