Undoubtedly, tech is ruling 2024. Tech stocks have always been an important driver in a portfolio because of their innovative nature. But if the last two weeks reminded us, you never want to have all your eggs in one basket. Diversification is key, and one way you can diversify a winning portfolio in 2024 is to look at retail stocks.
Because when it comes down to it, this is a buy-and-sell economy. Consumers will consume, whether they are looking for staples or discretionary items. Whether the economy is doing well or poorly, whether interest rates are up or down, people will spend money at retailers.
And fortunately for retail stocks, inflation is cooling off. The annual rate of inflation in June was 3%, down from 3.3% in the previous month. Currently, inflation is at its lowest rate since March 2021.
The best retailers also embrace technology, as well. Many retail companies have changed how they do business in response to consumer behavior and desires, and adapted technology to meet those needs.
Retailers are using technology to power e-commerce efforts, improve their online presence, streamline operations and improve the customer experience.
Today we’re using the Portfolio Grader to pick some of the best retail stocks on the market. The Portfolio Grader evaluates stocks based on factors such as earnings performance, growth and analyst sentiment to come up with an “A” through “F” grade.
If this were a school, each of the names on this list would make the honor roll with good grades. They’re worth considering for anyone looking to round out their portfolios in 2024.
Costco Wholesale Corporation (COST)
A Costco Wholesale (COST) warehouse in Auburn Hills, Michigan.
Source: ilzesgimene / Shutterstock.com
Costco Wholesale Corporation (NASDAQ:COST) is one of the most innovative retail stocks you can buy. The company operates nearly 900 warehouse stores where customers can buy groceries, appliances, clothing and luggage.
However, what makes Costco special is its membership program. Costco customers pay the company $60 a year just for the right to walk through the front door. That guaranteed revenue stream is a difference-maker for investors.
In the third quarter of fiscal 2024, membership fees accounted for $1.12 billion. Considering the company’s net income was $1.68 billion, or $3.78 per share, you can argue that it’s the membership fee that is driving much of the profit for COST stock.
And Costco is now making a good decision by increasing the fee for basic membership to $65 annually. That $5 won’t be missed by members, but those dollars will add up for Costco. (Executive memberships, the higher membership tier, will increase $10 from $120 to $130 per year.)
Costco is up 25% this year and gets an “A” rating in the Portfolio Grader.
Walmart (WMT)
A photo of the Walmart (WMT) logo on the side of a truck.
Source: Sundry Photography / Shutterstock.com
Walmart (NYSE:WMT) is a direct competitor to Costco – its Sam’s Club’s warehouses operate much the same way. But Walmart also has a much bigger footprint because it operates Walmart stores that have groceries, home electronics, clothing, health products, toys, games and anything else you can think of.
With more than 10,800 locations that includes every state and two dozen countries, Walmart is the biggest retailer on the planet. And it uses that size to its advantage by negotiating with suppliers to give it ultralow prices that it can pass on to customers.
Suppliers don’t mind because it’s a feather in any manufacturer’s cap to be on Walmart shelves and get that kind of exposure.
Walmart’s e-commerce business is becoming more powerful, growing 22% from last year, according to the company’s fiscal Q1 2025 earnings report. Overall, Walmart reported revenue of $161.5 billion, up 6% from last year.’
WMT stock is up 33% this year and gets an “A” rating in the Portfolio Grader.
Macy’s (M)
macy's mall department store storefront. M stock
Source: digitalreflections / Shutterstock.com
Macy’s (NYSE:M) is a New York-based department store chain that sells home goods, cosmetics, clothing, shoes and accessories.
While you may not have been in a Macy’s store, you’re probably familiar with the name, as the company puts on the famous Thanksgiving Day parade that’s televised every Turkey Day.
The company’s had an interesting year, to say the least. The company is pretty much breaking even, first-quarter revenue was down nearly 3% and same-store sales saw a 1% drop. The company is retrenching by closing 50 stores this year and 150 in the next three years.
But the biggest news about Macy’s these days is the buyout offer that fizzled. Investment firms Arkhouse Management and Brigade Capital Management were working on a deal to take Macy’s private, offering $21 per share ($5.8 billion) and then raising the bid to $24. But Macy’s called the deal off earlier this month and shares dropped by $16.
Macy’s says it’s going to focus on its “Bold New Chapter” campaign to reinvigorate the stores. But if you think that another bidder could come calling, Macy’s is a dark-horse play.
The stock is currently on sale, down 18% on the year, and gets a “B” rating in the Portfolio Grader.
Datasea (DTTS)
a person carrying several shopping bags
Source: Shutterstock
Datasea (NASDAQ:DTSS) is a retail stock unlike others on this list. The Chinese company provides audio products that focus on ultrasonic, infrasound and directional sound technology to 48 million retail and enterprise customers.
It provides smart city solutions and 5G messaging applications in China, including smart security solutions for schools, public areas and tourist attractions.
It also uses its 5G communications platform, operating on a cloud service and powered by artificial intelligence, to use ultrasonic sterilization to prevent viruses and prevent infection.
And it is using AI to grow, having completed an upgrade of its core 5G communication business with AI technology. It’s expecting full-year revenue of $86 million this year, which would be a 1,128% increase from 2023.
Currently valued at less than $3 a share and down 22% this year, DTSS stock looks like an appealing option for investors looking for overseas diversification. It gets a “B” rating in the Portfolio Grader.
Rent the Runway (RENT)
Person holding cellphone with logo of US e-commerce company Rent the Runway Inc on screen in front of business webpage Focus on phone display
Source: Wirestock Creators / Shutterstock.com
Rent the Runway (NASDAQ:RENT) is a unique business. The company is a clothing rental subscription service – kind of like how you would rent a car at the airport for vacation or a business function.
Customers can rent clothes for a one-time occasion and have their outfits shipped to them a few days before the event.
Or they can get a membership and pay a monthly membership fee to have five, 10 or 20 items at a time and hold on to them as long as you want – and swap them out when you’re done and want to try something else.
If you like clothes and like to change your look, it’s an appealing option because your closet isn’t going to get stuffed, and you don’t have to worry about selling or giving away the stuff that you don’t like any longer.
The company has worked with roughly 3 million customers – 80% of them acquired organically, meaning they were brought in by word-of-mouth rather than advertising. Currently, it has a subscriber base of 145,000.
Revenue in the first quarter was $75 million, up $800,000 from a year ago. The growing company posted a net loss of $22 million and $6.03 per share, a massive improvement from a year ago when the loss was $30.1 million and $9.14 per share.
I’ll be keeping an eye on RENT stock, which is up 48% this year. It gets a “B” rating in the Portfolio Grader.
TJX Companies (TJX)
An outside shot of a T.J. Maxx (TJX) store in Romeoville, Illinois.
Source: Joe Hendrickson / Shutterstock.com
TXJ Companies (NYSE:TJX) is a solid brick-and-mortar stock, if you’ll pardon the pun. While some companies are struggling in the age of e-commerce, TJX is actually doing well because its business model is designed to drive people into stores rather than shop online.
The company has 4,900 locations with low-cost department stores such as Marshall’s HomeGoods, Sierra and T.J. Maxx. It sells clothing, home goods and furnishings at greatly discounted prices.
Because it’s a discount retailer, TJX doesn’t have a steady supply of the same goods coming in every week. Instead, its offerings are based on what it can snap up from its suppliers.
When a manufacturer overproduces or competing stores overbuy, TXJ makes an offer and bring the goods into its own stores.
That creates a “treasure hunt” mentality among shoppers – goods at a T.J. Maxx are different every week, and no store has the same inventory as another, so e-commerce takes a back seat.
Discount stores like T.J. Maxx are more appealing when people are stretching their paychecks because of inflation or interest rates. So not surprisingly, TJX reported revenue in the first quarter of fiscal 2025 of $12.5 billion, up 6% from a year ago.
TJX stock is up 20% this year and gets a “B” rating in the Portfolio Grader.
BJ’s Wholesale Club (BJ)
BJ Wholesale (BJ) storefront with red BJ logo on front
Source: Helen89 / Shutterstock.com
BJ’s Wholesale Club (NYSE:BJ) is another warehouse-style retailer. But the business model is working, just like it is for Walmart’s Sam’s Club and Costco.
BJ’s sells food, home goods, furniture, outdoor products, electronics and toys. Unlike Costco, BJs also accepts manufacturer’s coupons. The Massachusetts-based company has nearly 250 warehouse stores, as well as nearly 200 gas stations in 20 states.
Revenue in the first quarter was $4.9 billion, up 4.1% from a year ago. Of that, membership fees brought in $111 million, up 8.6% from the first quarter of 2023.
BJ stock is up 33% this year and gets an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in COST and BJ. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
