Many retailers and investors live in fear of a "retail apocalypse" as once-popular stores close their doors amid competitive pressures from Amazon and other e-commerce players. Indeed, empty strip malls and abandoned stores dot the American landscape. Additionally, onetime top retailers have declared bankruptcy and struggle just to remain in existence.

However, some brick-and-mortar stores have fought back. These entities are leveraging their combined in-store and online presence to offer an omnichannel option. This allows retailers to offer a seamless shopping experience, adding the benefit of a nearby location and a personal touch to better serve customers who may also utilize e-commerce.

For this reason, retail stocks such as Best Buy (BBY 0.20%), BJ's Wholesale (BJ 1.61%), and Dollar General (DG -0.59%) could even be profitable investments. Let's find out why.

Masked woman with smartphone taking item off store shelf

Image source: Getty Images.

Best Buy

Best Buy was one of the earlier retail apocalypse stocks. Many feared e-commerce would put this company out of business early in the last decade. By 2012, Best Buy stock had plunged to the $11-per-share range.

However, the company changed its approach, altering its product mix and incorporating price matching and an omnichannel approach to selling. This helped to not only offer what customers wanted at a competitive price but also to leverage its physical store presence to gain a competitive advantage. Investors slowly warmed to the stock again, and today, it trades for about 10 times that 2012 low.

BBY Chart

BBY data by YCharts

Best Buy again showed that resiliency during the COVID-19 pandemic. Unlike peers such as Walmart or Costco Wholesale, most governments did not consider Best Buy "essential." To that end, it had to turn to creative approaches to avoid a COVID-19 apocalypse.

The company instituted a curbside-only model at the height of the shutdowns. This transitioned to shopping by appointment before a full reopening. Best Buy also offered in-store and, in some cases, home services that could include delivery, installation, and repair.

In the latest quarter, enterprise comparable-store sales rose by 5.8% from year-ago levels. Domestic comparable online sales -- which accounted for just over 53% of the company's revenue -- surged 242%. This helped adjusted earnings per share (EPS) to grow by 58% over the same period.

Moreover, the company is still raising its dividend, as it has every year since 2014. The current annual dividend of $2.20 per share yields 1.9% as of Friday's closing price.

The immediate future also looks bright. Analysts forecast annual earnings growth of 13.8%. Investors can also buy this income stream for just under 18 times forward earnings. Given its low valuation and history of adaptability, stockholders will probably continue to profit from Best Buy stock.

BJ's Wholesale

BJ's Wholesale operates warehouse clubs on the Eastern seaboard, competing with warehouse retailers such as Costco and Sam's Club. Now, with recent moves into Ohio and Michigan, it has slowly begun a march westward.

The stock began its second stint as a public company in 2018. After two years of stagnation, BJ's stock finally began to move higher following the March lows. It has nearly doubled in value year to date.

BJ Chart

BJ data by YCharts

Despite this move higher, it trades at a forward price-to-earnings (P/E) ratio under 17. Moreover, thanks to the pandemic, revenue and profit have surged. In the latest quarter, comparable club sales increased by over 24%, with digital sales rising by more than 300% year over year. Although the company did not break out digital sales, it stated that digital made up about "six full points of our 24% merchandise comp."

This significantly boosted profit levels and cash flows. Adjusted earnings per share of $0.77 resulted in a 97% increase from the same quarter last year. Also, quarterly free cash flow of almost $220 million exceeded the levels for the entirety of fiscal 2020.

This improved cash flow could bring long-term benefits to the company. Stockholders' equity, the value of the company after subtracting liabilities from assets, has turned positive since the second public offering. Furthermore, long-term debt has fallen by more than $300 million over the last year, to just over $1.2 billion.

Additionally, the increased cash flow could provide more capital to fund new club openings. This should interest shareholders, as the regional to national move once brought outsized returns to companies such as Walmart and Home Depot. Perhaps BJ's can boost its stock by following a similar path.

Dollar General

Economic downturns play into the hands of companies such as Dollar General. Due to massive unemployment, millions of consumers have to cut costs to the bone, making the ultra-discounter a more attractive place to shop. Not only that, but it's also surged ahead of archrival Dollar Tree. That company achieved mixed results with its purchase of Family Dollar. Additionally, Dollar Tree's $1 price point limits the company as lower-cost goods from China become more challenging to obtain.

About 75% of Americans live within five miles of a Dollar General. Around 75% of those approximately 16,700 locations serve communities of less than 20,000. Hence, it is a convenient option for urban and rural shoppers alike, allowing it to easily utilize an omnichannel advantage.

This may explain why same-store sales increased by almost 19% from year-ago levels in the latest quarter. In the same period, diluted earnings per share rose by more than 89%, and cash flows from operations of $2.9 billion surged by more than 157%.

At a forward P/E ratio of just under 24, the valuation has moved ahead of historical averages. Still, analysts project earnings will increase by 48% this year. This has probably helped Dollar Tree stock rise by 25% this year.

DG Chart

DG data by YCharts

Its achievement of double-digit profit growth before the pandemic also shows it can increase profits in both good times and bad. Although the economy should improve as the U.S. emerges from the contagion, sales levels will likely remain strong for the foreseeable future.