According to Bureau of Labour Statistics data released on Wednesday, US consumer prices rose 0.3% in November to bring the inflation rate to 2.7%.
Retail sales can be negatively affected by higher inflation.
Goldman Sachs’ Kate McShane believes that two retail stocks are worth investing in for the year 2025: Ollie’s Bargain Outlet Holdings Inc. (NASDAQ: OLLI), and Target Corp. (NYSE:TGT).
Take a look at the benefits that each one offers to investors.
Ollie’s Bargain
Kate McShane named Ollie’s Stock as a Top Small/Midcap Idea for 2025.
She remains optimistic as Ollie’s has been relatively less affected by the expected impact of tariffs in the Trump Administration.
The Nasdaq listed firm will also benefit from inflation if it continues to be a concern and consumers continue to prefer discounters.
Ollie’s Bargain has continued to improve its operational efficiency and expand its retail footprint, which have helped the company top street estimates in terms of adjusted earnings per share for its most recent reported quarter.
In a recent press release, the company said that “our value proposition is clearly defined, our deal-flow is solid, and our execution is at its best ever.”
Goldman Sachs has also expressed confidence in Eric van der Valk, who is scheduled to replace John Swygert as CEO at the start of the fiscal year 2025.
Ollie’s share does not pay dividends at the time of writing.
Target Corp
Kate McShane says that Target is trading at more than 20 percent below the high of its first half year. This represents a great opportunity to buy a name with quality for a discount.
McShane suggests the big-box retailer as a long-term investment because it is more exposed to the discretionary goods category – which she believes will grow strongly over the next year as the US Federal Reserve lowers interest rates.
Target has committed to enhancing its presence in the e-commerce sector and with private label brands, to generate new revenue streams.
Goldman Sachs believes that such initiatives will help to improve retailer margins, and lead to a significant increase in the share price of its company next year.
Walmart’s diversification has been a success.
It’s also attractive to have TGT because the company has been lowering prices for thousands of items that are frequently bought to attract price-sensitive customers this year.
The Target shares are a better option than Ollie’s bargain as they offer a dividend yield that is 3.29%. This makes them more attractive to those who want passive income on a long-term basis.
Target’s stock is expected to rise by more than 25 percent from its current price.
The post Two top US Retail Stocks to Buy After Today’s Inflation Data may change as new information unfolds
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