The narrative that the retail industry is dying as the era of online shopping rises is pervasive these days, but the fact is, many retailers are adapting to online shoppers' demands, and some are even performing exceptionally well.

To help investors hone in on some of the best retail stocks right now, we reached out to three Motley Fool contributors for their top retail picks. They came back with Target Corporation (NYSE:TGT), Nordstrom, Inc. (NYSE:JWN), and Home Depot (NYSE:HD). Here's why.

Person paying for an item in a store.

Image source: Getty Images.

Target is back on track

Jamal Carnette, CFA (Target): Late last year, I predicted that Target would have a strong year in 2018. I haven't been disappointed and look for the 33% year-to-date return to continue.

Part of my thesis was that Target is where Walmart was a few years ago. In late 2015, Walmart stock had its largest decline in 25 years as the company noted that investments in personnel and e-commerce would dent operations, but shares have outperformed the market since. The Target story has heavy parallels. The company invested $7 billion to improve the customer experience in both the digital and storefront channels. Target's second-quarter results show that the plan is clearly working.

Although shares are no longer as cheap as they were last year, Target continues to trade at a discount to the greater market. Look for the company to continue to improve operations, specifically the digital channel, and outperform.

Back from the brink

Danny Vena (Nordstrom): With the advent of e-commerce, brick-and-mortar retail has had to up its game to remain competitive. Many mall-based merchants have become victims of changing consumer behavior as more and more shoppers choose the ease and convenience of online purchasing.

In light of some well-publicized struggles and failed attempts to take the company private, many had written off high-end department store chain Nordstrom as just another casualty in the changing retail landscape.

Imagine investors' surprise when Nordstrom reported better-than-expected results last month that caused its stock to jump 13% in a single day. The company reported revenue of $4.07 billion, up 7.2% year over year, and topping analysts' consensus estimates for $3.96 billion. Profits also shined, as diluted earnings per share of $0.95 grew 46% compared to the prior-year quarter, while also exceeding expectations of $0.84. 

Comparable-store sales increased 4%, but the most eye-catching news from the retailer was that its e-commerce efforts continue to get traction, as online sales increased 23% year over year -- on top of 20% growth in the prior-year quarter -- and represented 34% of its second-quarter sales.

Nordstrom has been focusing on its core demographic, and that strategy is paying off, with its reward customers accounting for 58% of sales. By interacting with shoppers across both physical and online stores, its engaged customers are spending five times more, while their profitability doubles. Based on the strength of its results, Nordstrom also boosted its guidance for the year.

These results illustrate that Nordstrom's transition is gaining momentum, making it a top retail stock to buy in September.

Building on a strong foundation

Chris Neiger (Home Depot): The economy is firing on all cylinders, and America's housing market remains strong. Those two factors, along with Home Depot's commitment to building a strong business, have helped the company's share price climb nearly 74% over the past three years, outpacing the S&P 500's impressive 48% gain.

Investors have been pleased with how the company's management has focused its attention on keeping sales growing -- both in-store and online -- and the most recent quarter was no exception. Home Depot's comparable-store sales were up 8% from the year-ago quarter, total sales were up 8.4%, and earnings per share skyrocketed nearly 36%. Home Depot's CEO Craig Menear said that the company's seasonal business rebounded from the first quarter, and that the second quarter "exceed our expectations."

Indeed, after the company's strong second-quarter performance, management increased its full-year guidance to the current numbers: 5.3% growth for same-store sales, revenue growth of 7%, and for diluted earnings per share to jump 29% compared to the previous year.

It's nearly impossible for any major retailer to grow these days without an exceptional online strategy as well, and Home Depot's is already paying off. The company's second-quarter online sales were up 26% from the year-ago quarter, and the company continues to experiment with new ways to quickly get its products delivered to customers.

Adding to this retailer's investment allure is the fact that the company just announced a $6 billion share repurchase program in the recent quarter and that it pays a 2.1% dividend. As with any retail investment, investors will have to keep an eye on how well the economy is performing and how any changes many affect customers' buying habits. But Home Depot has made wise in-store and digital moves during this booming economy, and that's helped the company build a strong foundation that will benefit it for years to come.

Chris Neiger has no position in any of the stocks mentioned. Danny Vena has no position in any of the stocks mentioned. Jamal Carnette, CFA, owns shares of Target. The Motley Fool has the following options: short February 2019 $185 calls on Home Depot and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Home Depot and Nordstrom. The Motley Fool has a disclosure policy.