3 Top Retail Stocks to Buy Right Now

Posted On September 27, 2018 1:36 pm

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Many retailers have experienced a boon to their businesses thanks to a strong U.S. economy. But some companies are faring better than others and are positioning themselves for more growth in the coming years.

To help investors narrow down their search for some of the best retail stocks to buy right now, we asked three Motley Fool contributors for their top picks. They came back with Amazon.com(NASDAQ:AMZN)Walmart (NYSE:WMT), and Target Corporation (NYSE:TGT). Read on to find out why.

Retail and so much more

Jamal Carnette, CFA (Amazon): It’s rare to find a company that has a runway for growth in three separate businesses, but there’s nothing normal about Amazon. Although e-commerce may feel ubiquitous, only 10% of total U.S retail sales are online. As the largest e-commerce retailer in the country, Amazon will continue to benefit from a shift to the online channel.

However, Amazon’s true profit center isn’t in retailing but from its Amazon Web Services (AWS) cloud computing division. Because of its higher-margin profile, AWS allows Amazon to grow its bottom line and essentially subsidizes its lower-margin e-commerce business. Although Microsoft has recently emerged as a formidable challenger in the cloud, look for AWS to continue to grow at a rapid clip, as Gartner expects the overall industry to grow 58% over the next two years.

However, in-the-know investors are starting to get more excited about Amazon’s digital marketing opportunity. Although its in the nascent phases, Amazon is taking on Alphabet‘s Google and Facebook by posting 130% year-over-year growth rates in its “other” division, which primarily consists of digital marketing revenue. As of last quarter, Amazon reported a run rate of nearly $10 billion in this presumably higher-margin business. Look for the combination of these three businesses to boost Amazon’s stock price for years to come.

Adapting to an e-commerce world

Danny Vena (Walmart): Just when you think the world’s largest retailer doesn’t have any more tricks up its sleeve, it surprises. Many investors have…

Read the original article at: Fool.com

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