Retail has been one of the industries hit hardest by the pandemic, economic lockdown, and ensuing recession. Sure, over a decade of internet disruption and shifting consumer preferences already had businesses reworking how they distributed their goods, but without a doubt things have rapidly changed in the last few months -- and many companies were underprepared for this new digital era.

That isn't to say everyone is faring badly. On the contrary, even under duress, some retail is thriving, dealing with the changes, and gearing up for economic recovery. Three retail stocks that look like buys to me this month are Etsy (ETSY -0.87%), Texas Roadhouse (TXRH -3.93%), and Beyond Meat (BYND -1.30%).

A marketplace for the creative types

Online marketplaces have been booming this year, and Etsy is no exception. The e-commerce partner for small businesses and craftspeople reported a 32% jump in value of merchandise sold on its platform during the first quarter of 2020, and followed that up with a massive 146% surge during Q2 (the period from April to June). Resulting revenue was 137% higher than a year ago at $429 million.

Of the $2.69 billion in products sold via Etsy during the height of the lockdown, $346 million was face masks. And CEO Josh Silverman said that over 110,000 of the more than 3.14 million sellers on Etsy sold at least one mask in Q2. But management pointed out that the pandemic is more than a one-off event for the e-retail site. Non-mask sales grew 93%, and active sellers increased their sales 15% from a year ago. Etsy is thus becoming an important partner for craftspeople and sole proprietors looking to grow their online presence, and a growing trend toward self-employment in the wake of the current crisis could be another long-term development that works in Etsy's favor. 

Granted, the recent pace of growth is bound to decelerate going forward (although the revenue forecast for Q3 was pegged at an impressive 80%-to-115% year over year). But there's more than just a torrid pace of revenue expansion to like about this stock. Etsy is a profitable concern, and  the bottom line, as measured by adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), is growing at an even faster rate of 279% in Q2 to $151 million -- good for a profit margin of 35%. 

Etsy's stock is up 200% so far in 2020, but the booming bottom line is the reason. With consumers flocking to the internet in droves to get their shopping done and this online marketplace reaching new profitable scale, the fact it's trading for 53 times trailing 12-month adjusted EBITDA isn't completely unreasonable. I remain a buyer after the last report card.

A grocery cart full of boxes sitting on top of a laptop computer.

Image source: Getty Images.

A restaurant chain rolling with the punches

Within the world of retail, restaurants in particular have been negatively impacted in recent months. Casual dining chain Texas Roadhouse counts among those hit hard by COVID-19. After posting a 5.5% decline in revenue in the first quarter, Q2 sales took a sharp 31% tumble. Net losses in the period totaled $33.6 million.

But the ugly numbers only tell part of the story. Comparable-store sales (an average of foot traffic and average guest ticket size) rallied off a 47% year-over-year decline in April to come in down just 13% in July, with stores benefiting from the limited reopening of dining rooms and the company's booming to-go business. In fact, to-go sales have more than doubled from pre-pandemic levels, and even in July, with most dining rooms open again, to-go represents a full one-quarter of the average Roadhouse weekly sales.

The steakhouse's quick pivot to the new normal is thus helping it recover more quickly than its peers, and its focus on suburban America (versus operating in more dense urban centers, which have thus far been hit harder by COVID-19) is also working to Roadhouse's benefit. As the economy slowly puts itself back together, the loyal fanbase this chain has built by offering big portions at a reasonable price seems to be itching to get back to the restaurant. 

Free cash flow has recovered as a result, going positive in the second quarter and offsetting some of the first quarter's net outflows. And with over $282 million in cash left on the books and only $190 million in debt (mostly from the drawdown of short-term credit lines to help manage the crisis), this restaurant chain is primed to survive and thrive beyond the disaster that is 2020.

From steak to fake

Let's shift gears from the steakhouse to an entirely different take on eating. In the world of food, plant-based protein is one hot industry. I was a skeptic at first, but early leader Beyond Meat has me rethinking things. Even though its business -- supplying meatless product to the restaurant industry -- was expected to take a big hit amid the pandemic, the company easily overcame those worries. 

The U.S. food service segment did indeed fall 61% in Q2 and 57% internationally, but the U.S. retail division for grocery stores soared 195% from last year. In total, combined revenue was up 69% from the same period in 2019 to $113 million. And while the total global meat-alternative industry is less than 1% of the roughly $1.4 trillion spent every year on meat, it's picking up steam and could top $100 billion in a decade or less according to some analyst predictions.

Those are lofty targets, and Beyond Meat could still be a big beneficiary even if the industry falls short. But for now, consumer interest in food sustainability, vegetarian and vegan diets, and animal welfare is helping propel revenue higher. Profits aren't to be found here right now as the company opts to maximize growth and scale its operations for higher production, but shares are decidedly more attractive than they were last year after the stock exploded higher post-IPO. The stock currently goes for 20 times trailing 12-month sales and 16 times forward expected sales. 

If you think more meatless meals are the future, this is an intriguing pick. Beyond Meat has $222 million in cash and $50 million in debt on its balance sheet, so it's positioned itself for aggressive growth. But if you do buy, just remember to keep that initial position small (I typically start with less than 1% of my portfolio value) so you can buy more, as this stock's price tends to frequently go haywire.