Retailers are overhauling their operations as technology redefines the shopping experience. This includes developing an online presence to fend off e-commerce competitors, a strategy that has helped the industry maintain steady demand by giving it more sales channels. In turn, retail stocks were up 14.9% over the past six months compared to 10% for the S&P 500.
Nevertheless, investors should tread carefully as many companies will light cash on fire by opening new locations without the proper justifications. On that note, here are two consumer stocks boasting durable advantages and one we’re passing on.
One Consumer Retail Stock to Sell:
Monro (MNRO)
Market Cap: $634.9 million
Started as a single location in Rochester, New York, Monro (NASDAQ: MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Why Do We Think MNRO Will Underperform?
- Recent store closures and weak same-store sales point to soft demand and an operational restructuring
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
At $21.15 per share, Monro trades at 38.6x forward P/E. To fully understand why you should be careful with MNRO, check out our full research report (it’s free).
Two Consumer Retail Stocks to Watch:
AutoZone (AZO)
Market Cap: $58.35 billion
Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE: AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.
Why Will AZO Outperform?
- Store expansion strategy is justified by its healthy same-store sales
- Excellent operating margin of 19.6% highlights the efficiency of its business model
- Industry-leading 40.4% return on capital demonstrates management’s skill in finding high-return investments
AutoZone is trading at $3,519 per share, or 22.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Sprouts (SFM)
Market Cap: $7.65 billion
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.
Why Does SFM Stand Out?
- Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 7.7% growth over the past two years
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
Sprouts’s stock price of $79.93 implies a valuation ratio of 14.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
