5 Best Retail Stocks to Buy in November 2021

We’re now approaching the peak holiday shopping season. While retail companies are grappling with the global supply chain issues, analysts are bullish on retail stocks heading into Christmas.

Despite concerns over a slowdown in growth, US consumers are flush with cash, partially because of the rise in asset prices. While supply chain and logistics can be an issue, as was highlighted by many retail companies, the outlook for the sector looks positive.

Bank of America is bullish on retail stocks

Bank of America sees an uptick in retail spending and pointed to the economy’s reopening. While in 2020, there were still a lot of restrictions, the economy has largely reopened now. In its note, Bank of America said “We now lap constraints and expect strong comps in most categories as comfort with in-person shopping grows. With an uptick in socialization, consumers may do more gift-buying and personal shopping. While consumers are coming back to malls, we still expect a higher preference for gift cards – both physical and digital – by those who may remain hesitant.”

Here are the five best retail stocks that you can buy in November 2021.

1. Amazon (NYSE: AMZN)

Amazon is the worst-performing FAANG stock of 2021. While analysts are overwhelmingly bullish on AMZN stock, the price action has disappointed so far. The company has missed revenue estimates for the last two quarters, which is a rarity for the company. Its fourth-quarter guidance on both revenues and operating profits spooked investors and pointed to slowing growth and rising costs.

Amazon is the top retail stock for Bank of America

Bank of America has listed Amazon as the top internet pick in the retail industry. While Amazon is facing tougher YoY comps in the short term amid the reopening, the long-term growth outlook, both for the e-commerce and cloud, looks positive.

If you are looking at a retail stock in the online space, Amazon would fit the bill. The stock’s valuations look reasonable and provide a good entry point.

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2. Ulta Beauty (NYSE: ULTA)

Ulta Beauty looks like another good retail stock to buy in November 2021. Earlier this month, William Blair turned bullish on the stock and added it to its focus list. The brokerage pointed to “strong franchise quality, the likelihood of a substantial rebound in the cosmetics category over the next couple of years as consumers continue to emerge from the COVID pandemic, our view that near-term results are likely to continue to meet or exceed consensus estimates, and a reasonable to attractive valuation.”

ULTA is a reasonably valued retail stock

ULTA trades at an NTM (next-12 months) PE multiple 25.9x which looks reasonable. If you are looking at adding a specialty retail stock to the portfolio, ULTA is definitely worth a look.

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3. Bed Bath & Beyond (NYSE: BBBY)

Earlier this month, BBBY announced a partnership with Kroger. Under the partnership, Kroger customers would be able to shop BBBY products online through Kroger.com. The products would also be made available at select Kroger stores on a pilot basis next year.

The company announced that it would complete the $1 billion share buyback program with the fiscal year 2021, two years ahead of the original schedule. Corporate America has been repurchasing shares in a hurry and 2021 is expected to be a record year for buybacks. 2020 was a relatively slower year for buybacks as companies instead took a conservative approach amid the COVID-19 pandemic.

BBBY is a meme retail stock

BBBY is a meme retail stock. The stock has been a popular name on the Reddit group WallStreetBets. Like many other meme stocks, Wall Street analysts are bearish on BBBY stock. However, Bank of America has taken a contrarian bet and called BBBY “most consistent growth stories in retail with room for upwards estimate revisions.”

If you are looking at buying a retail stock that even WallStreetBets loves, BBBY would fit the bill. The company is a play on the business transformation and could be a long-term winner if the company executes well.

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4. Walmart (NYSE: WMT)

Walmart stock has underperformed the markets as well as retail peers in 2021. However, the stock now looks a good buy looking at the reasonable valuations and the company’s pivot towards e-commerce.

Bank of America finds WMT a good discount retail stock

Bank of America finds WMT as a good discount retail stock. The consensus view is also bullish on WMT stock and it has received a buy rating from 27 of the 35 analysts polled by CNN Business. Eight analysts have a hold rating. None of the analyst rates WMT stock as a sell. Its median target price of $170 is a premium of almost 14% over current prices.

If you are looking at building a portfolio of retail stocks, it is hard to overlook WMT, the largest brick-and-mortar retailer globally. The company has been making aggressive moves in the e-commerce space and has rolled out autonomous trucks for the delivery of online orders.

It also pays a dividend and at current prices, the yield is just under 1.5%, which is above the S&P 500’s dividend yield.

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5. Five Below (NYSE: FIVE)

Five Below is a specialty retailer and mostly sells goods priced below $5. The stock has been very volatile this year but has rebounded sharply over the last month. If you are looking at a fast-growing retail stock, in an industry otherwise growing at moderate rates, FIVE looks among the best retail stocks to buy in November.

FIVE is a growth retail stock

Wall Street analysts are also bullish on FIVE stock and eight of 11 analysts covering it rate it as a buy while the remaining three have a hold rating. Its average target price of $238.30 is a premium of 12% over current prices.

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