Despite ongoing headwinds, the retail industry is growing due to increasing internet penetration and policy focus on digitalization. Hence, I think it might be wise to invest in retail stocks Wal-Mart de México, S.A.B. de C.V. (WMMVY), BJ’s Wholesale Club Holdings, Inc. (BJ), and Marui Group Co., Ltd. (MAURY).
A growing middle class, increasing internet penetration, and policy focus on digitalization are expected to make many emerging markets attractive for retail investment. Moreover, online sales is expected to continue to rise, with projected year-on-year growth of over 6%, taking their share of global retail sales to more than 14%, marginally exceeding the 13.9% share in 2022.
Matthew Shay, president, and chief executive officer NRF, says, “In just the last three years, the retail industry has experienced growth that would normally take almost a decade by pre-pandemic standards.” “While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels,” he added.
In addition, the smart retail market is expected to grow at a CAGR of 24.4% to $82.68 billion in 2026.
Also, non-store and online sales, are expected to grow between 10% and 12% year-over-year to a range of $1.41 trillion to $1.43 trillion. While many consumers continue to utilize the conveniences offered by online shopping, much of that growth is driven by multichannel sales, where the physical store still plays an important component in the fulfillment process.
Take a look at the stocks mentioned above:
Wal-Mart de México, S.A.B. de C.V. (WMMVY)
Headquartered in Mexico City, Mexico, WMMVY owns and operates self-service stores in Mexico and Central America. The company operates discount warehouses and stores, hypermarkets, supermarkets, and membership self-service wholesale stores.
On April 10, WMMVY announced the consummation of the acquisition of all the shares of Trafalgar Digital, SA de CV, Institución de Fondos de Pago Electrónico (IFPE), a company that has authorization for, and is operating as a IFPE. Walmex will strengthen its financial solutions and accelerate the access of millions of customers and partners to the benefits of the digital economy.
Its trailing-12-month EBIT margin of 8.30% is 8.8% higher than the 7.64% industry average. Its trailing-12-month net income margin of 5.90% is 84.3% higher than the 3.20% industry average.
During the fiscal first quarter ended March 31, 2023, WMMVY total revenues increased 9.7% year-over-year to MXN206.08 billion ($11.60 billion). Net income grew 3.7% year-over-year to MXN11.52 billion ($648.43 million), while its EPS increased 3.8% year-over-year to MXN0.66.
WMMVY’s EPS is expected to increase 33.1% year-over-year to $0.41 for the fiscal second quarter that ending June 2023. The company’s revenue for the same quarter is expected to increase 24.2% year-over-year to $11.87 billion. Additionally, it has topped consensus revenue estimates in three of the trailing four quarters, which is impressive.
Shares of WMMVY have gained 19% over the past nine months to close the last trading session at $40.77.
WMMVY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade in Stability and a B in Quality and Growth. It is ranked #19 out of 37 in the A-rated Grocery/Big Box Retailers industry.
Beyond what is stated above, we’ve also rated WMMVY for Value, Momentum, and Sentiment. Get all WMMVY ratings here.
BJ’s Wholesale Club Holdings, Inc. (BJ)
BJ operates warehouse clubs in the eastern half of the United States. It provides perishable, general merchandise, gasoline, coupon books, promotions, and other ancillary services.
On March 9, 2023, BJ announced that it is adding five clubs to its growing portfolio across the United States. The expansion includes plans for a new club in Madison, Alabama, increasing BJ’s retail footprint to 20 states.
Its trailing-12-month asset turnover ratio of 3.21x is 262.9% higher than the 0.89x industry average. Its trailing-12-month return on common equity of 60.68% is 474.3% higher than the 10.57% industry average.
BJ’s total revenues rose 13.1% year-over-year to $4.93 billion in the fiscal first quarter that ended January 28, 2023. The company’s adjusted net income increased 24.4% year-over-year to $136.69 million, while its adjusted EPS increased 25% year-over-year to $1.
Street expects BJ’s revenue for the fiscal first quarter ended April 2023 to increase 7.8% year-over-year to $4.85 billion. Its EPS is expected to come in at $0.85 for the same quarter. Additionally, it has topped consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 18.6% over the past year to close the last trading session at $74.95.
BJ’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
BJ has a B grade for Value. It is ranked #18 in the same industry.
Click here to see the additional POWR Ratings for BJ (Growth, Momentum, Stability, Quality, and Sentiment).
Marui Group Co., Ltd. (MAURY)
Headquartered in Tokyo, Japan, MAURY is an investment holding company engages in the retailing and FinTech businesses in Japan. The company engages in the rental and the management of commercial property, purchasing, and sale of clothes and accessories, space production, advertising, fashion distribution, general building management, etc.
Its trailing-12-month asset turnover ratio of 0.22x is 13.4% higher than the 0.20x industry average. Its trailing-12-month gross profit margin of 87.45% is 46.4% higher than the 59.75% industry average.
MAURY’s revenue increased 3.6% year-over-year to Yen162.15 billion ($1.20 billion) in the nine months, which ended December 31, 2022. Profit attributable to owners of parent increased 13.8% year-over-year to yen18.48 billion ($137 million). Also, its EPS increased 20.2% year-over-year to yen93.2.
Analysts expect MAURY’s revenue for the fiscal fourth quarter ended March 2023 to increase marginally year-over-year to $411.43 million.
The stock has gained 19% over the past nine months to close the last trading session at $40.77.
MAURY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
MAURY also has a B grade for Quality, Growth, Stability, and Sentiment. It is ranked #17 in the same industry.
To access additional ratings for MAURY’s Value and Momentum, click here.
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WMMVY shares were unchanged in premarket trading Monday. Year-to-date, WMMVY has gained 17.05%, versus a 8.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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