3 Retail Stocks to Buy Before the Big Back-to-School Boom

Core Viewpoint - The retail sector is experiencing a shift as the back-to-school season approaches, with parents expected to increase spending despite previous sluggish retail sales [1][2]. Retail Industry Overview - Retail sales have been negative when adjusted for inflation over the past year, with low- and middle-income consumers cutting back on non-essential purchases [1]. - A Retail Dive study indicates that parents plan to spend nearly 22% more on back-to-school purchases in 2024, with higher-income parents not planning to cut back [1]. Company Analysis Walmart (WMT) - Walmart is highlighted as a strong retail stock choice for the back-to-school season, benefiting from its reputation for low prices [3]. - The stock has increased by 32% in 2024, with a 19% rise in the last three months, and the company is expected to meet or exceed its sales and operating income guidance [3][4]. - Piper Sandler has initiated coverage on Walmart with an "Overweight" rating and a price target of $81, which is over 10% higher than the consensus estimate [4]. Costco (COST) - Costco remains a favored retail stock, trading above $830 per share and up more than 50% in the last year [5]. - The company plans to increase its membership fee, which is expected to have a minimal impact on revenue due to a retention rate of over 90% [5]. - The membership fee increase is immediately accretive to Costco's bottom line, positioning the company to potentially outperform in upcoming earnings reports [5]. DICK'S Sporting Goods (DKS) - DICK'S Sporting Goods has seen its stock outperform the retail sector, up more than 50% in the past year and nearly 10% since a dip in May [6]. - The stock is trading at just over 15 times forward earnings, which is considered attractively valued compared to the sector average [6]. - Investors benefit from a compelling dividend of $4.40 per share annually, making it a strong candidate among retail stocks [6].