Retail

Amazon Hasn't Killed Retail After All: 4 Top Retail Stock Buys for 2019

Foot Locker

This athletic shoe retailer has rallied from lows and looks ready to move higher. Foot Locker Inc. (NYSE: FL) is an athletic footwear and apparel retailer in North America, Europe and Asia. The company’s banners include Foot Locker, Champs Sports, FootAction, Kids Foot Locker, Lady Foot Locker, SIX:02 and Eastbay.

Many Wall Street analysts feel that consumers are bearing price increases from the top companies like Nike, Reebok and Adidas. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return on invested capital, which some think will be a source of multiple expansion.

Foot Locker investors receive a 2.54% dividend. Jefferies has a price target of $62, and the posted consensus target is $58.57. The shares closed trading on Friday at $54.34 apiece.

The Gap

This top retailer could be poised to benefit from continued extra consumer spending, and it is the top pick at Jefferies. Gap Inc. (NYSE: GPS) sells private label merchandise through three main retail concepts: The Gap, Old Navy and Banana Republic, along with smaller growth vehicles Athleta and Intermix. The company also sells its products through its company websites. Most of its international stores are Gap stores, concentrated in Western Europe (France, United Kingdom), Japan, China and Canada. The company has over 3,500 stores worldwide.

The company announced last summer that Neil Fiske would take over the role of president and chief executive of its Gap brand. Fiske previously had been chief executive of Billabong, Eddie Bauer and Bath and Body Works.

Gap shareholders receive a 3.78% dividend. The $50 Jefferies price target is well above the $29.50 consensus figure, as well as the most recent close at $25.66.

Kohl’s

This top retailer has been hit hard but remains a top pick. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States that offer private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices.

While retail chains have suffered from internet pressure, Kohl’s has held its own as consumers see the company as a solid discount retailer. In addition, Amazon is growing its partnership with the department store chain. Last summer, the two companies announced that Kohl’s would begin selling Amazon devices, such as the Echo and Fire tablets, at 10 of its stores. Kohl’s also will be accepting Amazon.com returns at certain U.S. locations.

Investors receive a 3.70% dividend. Jefferies has set its price target at a stunning $110. The consensus price objective was last seen at $76.28, while the stock ended last week trading at $65.89 per share.

These four top companies all pay dependable dividends and have good upside to their Jefferies price targets. Since earnings are on the way, it may make sense for investors to buy partial positions now and see if there are any pullbacks on the fourth-quarter results.