Wall Street Favorites: 3 Retail Stocks With Strong Buy Ratings for May 2024

Core Viewpoint - The retail industry has faced significant challenges over the past five years, including the pandemic, store closures, and a shift towards online shopping, compounded by high inflation and interest rates, leading to a slowdown in consumer spending. However, certain retail stocks are still considered viable investment opportunities as interest rates may decrease in the near future [1]. Retail Industry Overview - The recent retail sales report for April indicated flat growth, suggesting a slowdown in consumer spending due to persistent inflation and high interest rates. Economists anticipate potential relief if the U.S. Federal Reserve lowers interest rates in September, which could positively impact retail stocks [1]. Walmart (WMT) - Walmart reported first-quarter earnings per share (EPS) of 60 cents, exceeding the forecast of 52 cents, with revenue of $161.51 billion, surpassing the estimated $159.5 billion. The growth was driven by a 22% year-over-year increase in e-commerce sales and a 24% rise in global advertising sales [4]. - The stock has gained 28% over the past year, with a median price target of $66.64, indicating a potential 3% upside from current levels [3][4]. Lululemon Athletica (LULU) - Lululemon's stock has declined 34% this year, but analysts rate it a strong buy, with a median price target of $472.60, representing a 41% upside. Despite recent challenges, including slowing U.S. sales and plans to close a distribution center, the company reported strong international sales growth of 54% year-over-year, with China sales increasing by 78% [5][6]. - Lululemon's stock has increased 94% over the last five years, indicating long-term growth potential despite current setbacks [6]. AutoZone (AZO) - AutoZone is rated a strong buy by 18 analysts, with a median price target of $3,314.72, suggesting a 13% upside. The company has benefited from a growing trend towards DIY automotive repairs, particularly for older vehicles [7][8]. - AutoZone's stock has risen 13% this year and has nearly tripled over the past five years, with a remarkable increase of 95 times since the company began share repurchases in 1999 [8].