The top retail stocks for 2022, according to analysts at Cowen, are companies specializing in luxury goods and those that are resistant to inflation.
Investors should look for defensive stocks that perform better during general market recessions and offer solid returns amid inflation, which will be “significant and semi-permanent,” by next year, analysts wrote. de Cowen in a report released Tuesday.
“Cowen prefers owning stocks geared to high-end consumers and stocks that deliver significant value to low-end consumers,” wrote senior analyst Oliver Chen. These include
LVMH Moët Hennessy Louis Vuitton (ticker: MC: France),
HR, (RH), the retailer formerly known as Restoration Hardware,
Brilliant Earth Group (BRLT),
Wholesale Costco (COT), and
Shining earth, HR, and
LVMH can withstand inflation through their pricing power and market share, Chen wrote. RH, for example, has about 4.5% of the furniture industry’s market share, and Brilliant Earth has about $ 61 billion of the world’s $ 300 billion jewelry market, analysts say.
The company’s top retail choice for 2022 is the department store
Macy’s (M), which is up about 134% this year. The company has come under pressure to separate its digital operations from its bricks and mortar business, but Cowen says
Macy’s is ramping up its digital business, which could reach $ 10 billion in revenue by fiscal 2023. That would represent around 40% of overall revenue, Cowen estimates.
Other choices from retail giants include
Target (TGT) and
Walmart, who have successfully merged their physical store operations with digital strategies, Chen wrote. Target, Walmart, and Costco are also cross-category stock picks that offer services that include next-day and two-day delivery, curbside pickup, and partnerships with Instacart.
Investors should not overlook the beauty industry as “consumer awareness and preference for health and wellness remains high,” the analysts wrote.
Beauty Elf (ELF),
Olaplex Holdings (OLPX),
Sally Beauty Holdings (SBH),
Beauty and health (SKIN), the parent of Hydrafacial, and
Ulta Beauty (ULTA), each offer “innovation, price and generation Z” factors. Among the picks, Olaplex is expected to experience the strongest sales growth – 26.6% – in a global cosmetics industry expected to hit $ 415.29 billion from 2021 to 2028.
Write to Logan Moore at [email protected]