Retail sales grew at a slower pace than expected in September. However, the retail sector has put up a brave show over the past several months amid inflationary and price pressures.
The Federal Reserve has cut interest rates twice since September and is expected to go for another rate cut in December, which bodes well for the retail sector. Also, the ongoing holiday season is expected to boost sales.
Given this situation, it would be ideal to invest in retail stocks with a strong online presence. We have selected four stocks, namely, Amazon.com, Inc. AMZN, Boot Barn Holdings, Inc. BOOT, Tapestry TPR and Ross Stores ROSS, for investors.
These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #2 (Buy), and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Retail Sales Jump
Retail sales totaled $733.3 billion in September, increasing 0.2% sequentially and 4.3% year over year, the Commerce Department reported last week. Although retail sales fell short of analysts’ expectations of a rise of 0.4%, the sector has shown steady growth in 2025. Total retail sales from July through September rose 4.5% year over year.
September’s rise follows a 0.6% in retail sales in August. A struggling labor market and an unemployment rate at a four-year high became key factors behind the slowdown in retail sales in September. Part of the jump in retail sales was also triggered by a rise in the prices of goods.
The Federal Reserve has cut interest rates by a quarter percentage point twice in September and October. This has somewhat helped consumers. However, inflation remains high, and consumers are spending cautiously. Hopes of another rate cut in December have brightened over the past week. Markets are now pricing an 87.6% chance of a 25-basis-point rate cut by the Fed in its December meeting, according to the CME FedWatch Tool.
Moreover, the holiday season, which typically triggers a surge in retail sales, has started on a positive note. Online spending, powered by AI, saw a surge in sales on Black Friday. Shoppers spent a record $11.8 billion on Black Friday, up 9.1% year over year, according to an Adobe Analytics report cited by Reuters.
The same report stated that Mastercard SpendingPulse shows a 10.4% year-over-year jump in online sales on Black Friday, while in-store sales grew only 1.7% from the year-ago levels. The solid start to the holiday season is likely to continue in the coming days, which bodes well for the retail sector.
4 Retail Stocks With Upside
Amazon.com, Inc.
Amazon.com, Inc. is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. AMZN’s online retail business revolves around the Prime program, well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish a footprint in the physical grocery supermarket space. AMZN also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service space, thanks to Amazon Web Services.
Amazon.com has an expected earnings growth rate of 29.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the last 60 days. AMZN presently carries a Zacks Rank #2.
Boot Barn Holdings, Inc.
Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. BOOT’s products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce Website.
Boot Barn Holdings’ expected earnings growth rate for the current year is 20.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.9% over the past 60 days. BOOT currently has a Zacks Rank #2.
Tapestry
Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR offers lifestyle products, which include handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrances and watches.
Tapestry’s expected earnings growth rate for the current year is 10.4%. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the past 60 days. TPR presently carries a Zacks Rank #2.
Ross Stores
Ross Stores operates as an off-price retailer of apparel and home accessories, primarily in the United States. ROST operates its stores under the Ross Dress for Less (Ross) and dd’s DISCOUNTS names. Ross Stores primarily offers in-season, branded and designer apparel, footwear, accessories, and other home-related merchandise for everyone in the family.
Ross Stores’ expected earnings growth rate for the current year is 0.63%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. ROST presently carries a Zacks Rank #2.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Tapestry, Inc. (TPR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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