Lingering recession worries and inflation headwinds have really taken a toll on consumer spending over the past year. Despite the uncertain fate of the consumer, the following trio of retail stocks — TJX, HAS, and CROX — continue to sport bullish ratings from analysts.
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Indeed, a bull-case scenario for retail stocks could see no recession hitting us in the near future. Undoubtedly, whenever the market braces for an economic downturn that never materializes, a bounce may be in order for the names most at risk of such a contraction. Though the consumer has faced notable setbacks of late, you cannot ignore the glimmers of resilience that can be found in specific corners of the retail space. Therefore, let’s analyze the three stocks shown below.
Hasbro (NASDAQ:HAS)
Hasbro is a $9 billion toy company that had a dreadful 2022. The stock shed more than half of its value from the December 2021 peak to the March 2023 trough as macro headwinds and inflationary pressures took a toll.
With strong brands (think Play-Doh, Transformers, and Dungeons & Dragons) and a turnaround strategy in place, though, I think Hasbro is a compelling buy on the dip for any courageous investor seeking to play a consumer turnaround. With a low bar set ahead of it and a modest multiple, my inner value investor is keeping me bullish.
Back in April, Hasbro stock caught the attention of a notable bear over at Bank of America (NYSE:BAC). Analyst Jason Haas upgraded HAS stock from Sell to Hold. More recently, Mr. Haas upgraded the stock again to Buy from Hold, citing strength in the Lord of the Rings Magic set.
Indeed, it’s always an encouraging sign when a bear turns bullish in just a few months. With an $85 price target, Mr. Haas expects around 30.6% upside from current levels.
The company isn’t just committing to spending money to widen the width around its iconic toy brands. Hasbro CEO Chris Cocks, who took the helm in February 2022, recently noted that “consumer insights” and “expanded data analytics” could be areas that could help the company turn a corner. Indeed, there’s a lot of value to be had in data, and Cooks’ willingness to explore analytics leads me to believe Hasbro’s on the right side of innovation.
In any case, Hasbro remains a discretionary company that’s pretty much at the mercy of consumers. As consumers heal, so too should Hasbro’s share price. Now up around 40% from March 2023 lows, I think Hasbro’s recovery is in full swing.
What is the Price Target for HAS Stock?
Hasbro is a Strong Buy on TipRanks, with six Buys and two Holds. The average HAS stock price target of $76.50 implies 15.8% upside potential from here.
TJX Companies (NYSE:TJX)
TJX has been profoundly resilient amid the same slate of headwinds that caused other retailers to crumble. The company, which operates under such names as T.J. Maxx, Marmaxx, Winners, HomeSense, and Marshalls, has benefited from a challenged consumer that seeks good value for money. Indeed, the off-price retailer has been able to meet the demand for bargain-hunting.
As consumer balance sheets slowly and steadily recover, I don’t expect strength at TJX to subside in the near future. It’s not like the consumer will go from cost-cutting to splurging on big-ticket discretionary goods at sticker price anytime soon. For now, I’m staying bullish on TJX. However, I do acknowledge the price of admission the stock carries now.
For the first quarter, TJX clocked in earnings per share of $0.76, comfortably above the $0.72 estimate. Sales were strong, and they’re not showing any signs of slowing down — not with lingering inflation and plenty of uncertainty that lies ahead.
Recession odds may have lowered a bit, but that doesn’t mean consumers are out of the woods. As such, expect consumers to stay value conscious as they head to TJX’s banners as opposed to pricier alternatives in the retail space.
The stock trades at 26.7 times trailing price-to-earnings, about in line with the apparel retail industry average of 25.6. TJX may sell discounted goods, but its stock is anything but at current levels. Still, the price target upgrades keep coming in ahead of second-quarter earnings, which are on tap for August 16.
What is the Price Target for TJX Stock?
TJX is a Strong Buy on TipRanks, with 18 Buys and three Holds given in the past three months. The average TJX stock price target sits at $92.70, implying upside potential of 7.5%.
Crocs (NASDAQ:CROX)
Crocs is a footwear maker that’s still off around 43% from its 2021 all-time high of around $184. The company reported better-than-expected earnings for the second quarter, with earnings per share coming in at $3.59, ahead of the $2.98 estimate.
Despite the beat, investors punished the stock due to sluggish sales growth (up 11.2% year-over-year), even though Crocs clocked in a quarterly record revenue of $1.07 billion. As expectations reset again, I’m inclined to be bullish on Crocs as a play that’s quite deep with value.
At writing, the stock trades at just 9.6 times trailing price-to-earnings, miles below the 30.4 times multiple of the footwear & accessories industry.
Even if you’re not a fan of the product, it’s tough to pass up such a discount relative to the industry averages. Also, with the confidence of so many Wall Street analysts, I think Crocs is worth a shot if you’re bullish on the consumer from here.
What is the Price Target for CROX Stock?
Crocs stock has a Strong Buy consensus rating, with seven Buys and two Hold ratings assigned by analysts in the past three months. The average CROX stock price target of $152.75 entails a massive 48.3% gain from here.
Conclusion
The following trio of Strong Buy-rated consumer stocks looks ripe for picking. Undoubtedly, shares of Crocs seem to have the most to gain (nearly 50%) over the year ahead, at least according to Wall Street.
