Are These 3 Retail Stocks Oversold or Really in Trouble?

Key Points

• Trade tariffs have hit the retail sector hard on the assumption that they will drive costs and prices higher; however, that risk is off the table now.
• Today's list of three stocks shows promise of double-digit upside on clear skies ahead.
• Price action shows an asymmetrical setup to favor the buyers today.

As new trade tariffs get rolled out by President Trump with the United States' main trading partners, some sectors of the stock market are going to get hit harder than others due to the very nature of where these tariffs are focused. Not only the countries that they are targeting but also the products, which are focused on agriculture, and also all the materials that affect prices and costs for the retail sector.

This is why consumer discretionary stocks have been hit the hardest. The fastest conclusion the market jumped to is that prices are going to double—if not triple—for most of the everyday products that people use and buy in the market. Whether that belief has any traction is up to time itself, but there is one certainty investors can take away in this situation.

If this was really the case, and it meant failure or a complete collapse for some companies, then the tariffs would not have been implemented in the first place. This is why investors can look to some of the biggest names in the industry for potential opportunities, such as Nike Inc. NYSE: NKE, Lululemon Athletica Inc. NASDAQ: LULU, and Ralph Lauren Co. NYSE: RL.

Nike’s Discount Won’t Stand

One of the biggest athletic and sportswear brands in the world is now trading at 58% of its 52-week high, and that should be enough to get eyes turning in the direction of Nike—until a lot of today’s exaggerated claims are thrown on top of it. Value investors don’t care about the story but rather about the underlying value a business can provide.

With this in mind, Nike is a potential opportunity today, especially as the assumptions that these tariffs will break up the company’s finances seem overextended. Even if these tariffs pass, Nike’s size and market share are broad enough to solve this issue.

But keeping in mind that there is too much at stake for both countries, Vietnam officials have agreed to step onto the negotiating table with the United States to bring tariffs down to 0% and keep the trade between the two nations going. This is where the potential rebound and shift in sentiment for Nike might come from.

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This might be the reasoning behind the $94 million of institutional capital that went into Nike stock this quarter alone, including April 2025, the month that initiated the rollout of trade tariffs. This vote of confidence seems to keep Wall Street’s consensus price target of $87.4 per share in Nike stock today, calling for up to 57.1% upside from today’s prices.

Markets Still Like Lululemon Stock Today

This brand has been growing across the United States and all departments where it can be found. Lululemon’s audience and customer base are very fond of this brand for everyday wear, exercise, and other activities, so just like Nike, this company has the potential to grow in different demographics.

Now that it has fallen to 63% of its 52-week high, this stock has not only slightly outperformed Nike relative to highs, but it has also managed to keep its premium valuation in the eyes of the market. Today, Lululemon trades at a price-to-book (P/B) ratio of 7.8x.

This valuation calls for a steep premium compared to the discretionary sector’s average valuation of only 3.9x today. Some investors will start to call this stock a dangerous setup filled with downside. At the same time, seasoned traders and operators will remind them that the market always has a good reason to overpay for names it thinks can outperform the peer group and the market as well.

With this favor in mind, Wall Street analysts easily kept a $378.3 price target and called for as much as 43% upside, which matters most when a stock has sold off as today’s low price Lululemon has.

Ralph Lauren’s Price Action Sends a Message

Over the past month, shares of Ralph Lauren have fallen by 18% in this market-wide decline. However bearish this may seem at first, investors need to realize that this decline is much smaller than the sell-offs seen in Lululemon and Nike, showing a clear preference in part of the market.

This preference stems from the fact that these Asian nations have started to approach the United States in the spirit of negotiating better tariff and trade terms moving forward, which is driving the current Wall Street analyst view on Ralph Lauren stock.

Ralph Lauren has outperformed other names in this list and received a recent boost from Goldman Sachs as of April 2025 through their price target of up to $286 per share. This would imply a net upside potential of as much as 49% from where the stock trades today.