Retailers are overhauling their operations as technology redefines the shopping experience. Still, secular trends are working against their favor as e-commerce continues to take share from brick and mortars. This puts retail stocks in a tough spot, and over the past six months, the industry has pulled back by 8.3%. This drop is a noticeable divergence from the S&P 500’s 3.3% return.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one consumer stock boasting a durable advantage and two we’re steering clear of.
Two Consumer Retail Stocks to Sell:
Zumiez (ZUMZ)
Market Cap: $236 million
With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ: ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.
Why Should You Dump ZUMZ?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Persistent operating margin losses suggest the business manages its expenses poorly
- Falling earnings per share over the last six years has some investors worried as stock prices ultimately follow EPS over the long term
Zumiez’s stock price of $13.54 implies a valuation ratio of 50.4x forward P/E. Check out our free in-depth research report to learn more about why ZUMZ doesn’t pass our bar.
CarMax (KMX)
Market Cap: $8.40 billion
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE: KMX) is the largest automotive retailer in the United States.
Why Do We Pass on KMX?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Gross margin of 10.8% is an output of its commoditized inventory
- 15× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $56.18 per share, CarMax trades at 14.2x forward P/E. If you’re considering KMX for your portfolio, see our FREE research report to learn more.
One Consumer Retail Stock to Watch:
Dick's (DKS)
Market Cap: $16.55 billion
Started as a hunting supply store, Dick’s Sporting Goods (NYSE: DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.
Why Are We Fans of DKS?
- Comparable store sales rose by 4% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Earnings growth has easily exceeded the peer group average over the last six years as its EPS has compounded at 27.4% annually
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Dick's is trading at $210.90 per share, or 14.2x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
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