3 Retail Stocks That Will Ring the Register in 2025

Key Points

• Walmart is capturing a wider range of consumers, which is causing analysts to raise their estimates for earnings and the company’s stock price.  
• Costco is seeing no drop-off in retention after raising their membership fees, and most of the earnings growth from that move is still to come. 
• Amazon’s e-commerce business is starting to come back, which will boost the company’s bottom line.  

In the last two years, investors have become familiar with the phrase “stock picker’s market.” The technical definition goes against the advice to “just invest in the SPY and forget it.” That’s because a fund seeks to replicate the performance of its underlying index. However, in a stock picker’s market, the biggest gains are concentrated in a few stocks.

Retail investors only need to look at retail stock to get a practical example of a stock picker’s market. Heading into 2025, three companies control 17% of all U.S. retail sales. That’s up from about 11% in 2024. These companies have a loyal customer base, a strong (or growing) e-commerce presence, and are swimming in cash to fuel future growth. 

Not surprisingly, each of these stocks comfortably beat the performance of the S&P 500 in 2024, and each stock looks like it’ll continue to outperform the market in 2025.

Analysts Continue to Raise Their Price Targets for Walmart

Walmart Inc. NYSE: WMThas been one of the best-performing stocks in the last 12 months, delivering an impressive gain of approximately 72% as of January 9, 2025. Through the first three quarters of 2024, Walmart has delivered revenue that is 5% higher year-over-year (YoY). And the YoY gain on the bottom line is an even more impressive 14%.

Of course, it’s important to provide context that gives those numbers meaning. In the case of Walmart, it’s not about pricing power but the ability to attract current and new customers with its everyday low prices. On recent earnings calls, the company has noted that higher-income consumers are trading down for many discretionary items. Meanwhile, the company’s lower-income consumers may have smaller carts but still rely on Walmart for their staple items.

The consumer experience is happening both in-store and through the company’s mobile app, which is increasing the retailer’s stature in the competitive e-commerce space.

Analysts are forecasting 10% earnings growth in the next 12 months and are starting to raise their price targets well above the current consensus price of $93.95.

The Warehouse Club Model Is a Strong Predictor of Buyer Behavior

A key bullish argument for owning Costco Wholesale Corp. NASDAQ: COST stock is its business model. When consumers have to pay for the privilege of shopping in your store, they have a reason beyond price to prioritize your store.

After raising their membership fee for the first time in seven years in November, Costco continues to prove the model works. The company continues to have a retention rate of over 90%, and that revenue goes directly to the company’s earnings. Furthermore, due to the timing of the fee increase, Costco will realize most of that earnings growth in 2025 and 2026.

COST stock is up approximately 39% in the 12 months ending January 9. However, that includes a drop of nearly 6% since the stock reached a high of around $1,007 before it reported earnings in December. Analysts believe the stock will fill that gap in the next 12 months, but if they beat the projected earnings growth of around 9%, you should expect to see COST stock move even higher.

Amazon’s E-Commerce Business Looks Ready for a Comeback

Amazon.com Inc. NASDAQ: AMZN has been an interesting stock in the last few years. The company’s e-commerce business exploded during the COVID-19 pandemic, boosting the company’s cash position to record levels.

Since 2022, the company’s Amazon Web Services business has picked up the slack as the e-commerce business managed a consumer who faced the dual headwinds of sticky inflation and generationally high interest rates.

But in 2025, it appears that the company is once again firing on all cylinders. Amazon’s investments in robotics and automation should begin to deliver efficiency that will show up on the company’s bottom line and free cash flow, which have become areas of emphasis for the company. 

AMZN stock is up 46% in the last 12 months. Analysts forecast 17% earnings growth, but that doesn’t appear to be accounted for in analysts' price targets.