LEVI - The 3 Most Undervalued Retail Stocks to Buy in July 2024
2024-07-09 13:14:50 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Retail stocks continue to underperform the broader market. Year-to-date, the S&P Retail Index is up only 2% compared to an 18% gain in the benchmark S&P 500 index. While many undervalued retail stocks are strong, they are few and far between in the current market. Most retailers continue to struggle, posting mixed financial results and seeing their share prices slide deeper into the red.
Most retailers have yet to recover from the ravages of the COVID-19 pandemic that forced brick-and-mortar stores to close or operate at reduced capacity. Many consumers who switched to shopping online during the pandemic have yet to return, and many retailers have found it difficult and expensive to move their sales channels online.
The current environment has pushed many retail stocks down to the point that they look undervalued at their current prices. This presents an opportunity for shrewd investors. Here are the three most undervalued retail stocks to buy in July 2024.
Nike (NKE)
Investors looking to buy a retail stock on sale should consider sneaker giant Nike (NYSE: NKE ). The company’s earnings print at the end of June sent its share price down nearly 20% in one trading session, bringing its year-to-date loss to 30%. Currently changing hands at $73 a share, NKE stock is at a 52-week low and sinking. This presents a rare opportunity to buy the stock of an iconic American retailer at a discounted price.
Nike posted mixed results for its fiscal fourth quarter. However, sales for all of fiscal 2024 were flat compared to the previous year and represented the slowest pace of annual sales growth since 2010. Management said they continue to face challenges from soft sales in China and uneven consumer trends in the rest of the world. This situation has further eroded NKE stock. The shares are now trading 17% lower than five years ago.
While Nike’s current situation is discouraging, hopes for a rebound make now a good time to buy undervalued retail stocks at rock-bottom prices.
Levi Strauss (LEVI)
Another retail stock that investors have sent to the dog house after its latest quarterly results: Levi Strauss (NYSE: LEVI ). The denim retailer credited with inventing blue jeans has seen its stock decline 17% since it issued a disappointing print at the end of June. While denim jeans are staging a comeback with consumers and trending on social media, Levi Strauss appears to have missed the boat on the resurgence.
Levi reported EPS of 16 cents a share, which topped Wall Street forecasts of 11 cents. However, revenue in the company’s fiscal second quarter totaled $1.44 billion, narrowly missing the $1.45 billion that was anticipated among analysts. Despite the narrow miss, investors have punished LEVI stock, given that the company was expected to be a main beneficiary of the denim craze. Levi stock is now down 5% over the last five years . This is another opportunity to buy a legendary brand at distressed prices.
Lululemon Athletica (LULU)
For a retail stock that has truly crashed this year, look to Lululemon Athletica (NASDAQ: LULU ). The athletic apparel maker known for its yoga pants has seen its share price plunge 42% through the first half of 2024. LULU stock is currently the second worst-performing stock in the benchmark S&P 500 index. Only retail pharmacy chain Walgreens Boots Alliance (NASDAQ: WBA ) has performed worse.
Exerting downward pressure on Lululemon stock has been evidence of slowing sales at the company, particularly in North America. Most recently, Lululemon reported better financial results than Wall Street expected . However, an ongoing sales slowdown in the U.S. and Canada and weak forward guidance for this year’s second half sunk LULU stock.
Lululemon is still growing in North America but at a much slower rate. During the first quarter, sales in the Americas increased 3% versus 17% a year earlier. Management has said they expect a turnaround in the second half of 2024 and into 2025. If true, now is the time to bottom fish this undervalued retail stock .
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
More From InvestorPlace
- The #1 AI Investment Might Be This Company You’ve Never Heard Of
- Musk’s “Project Omega” May Be Set to Mint New Millionaires. Here’s How to Get In.
- Legendary Investor Predicts: “Forget A.I. THIS Technology Is the Future”
The post The 3 Most Undervalued Retail Stocks to Buy in July 2024 appeared first on InvestorPlace .