If you're looking for the best retail stocks to buy even as e-commerce continues to boom, you've come to the right place. In this segment of Backstage Pass, recorded on Dec. 15, Fool contributor Rachel Warren discusses her top retail stock for investors to consider right now.
10 stocks we like better than Target
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Rachel Warren: These supply chain bottlenecks, they've been easing in some instances. But in many places they are not going anywhere anytime soon because there has been such a supply-demand imbalance, that's going to take a lot of time to work itself out.
There's been a lot of different reasons for different shortages of various products. That's not something that will be resolved overnight. I do think there's something where before you would just say, oh, it's more convenient to shop online, and in some cases it's still is, it may end up being that the item you want is out of stock online and it's actually much easier to go in person or perhaps to get it delivered to a store near where you live. On that point, I went with a different pick.
Not so much in the digital space, but for me, one of the few brick-and-mortar stores that I think is a really interesting stock to look at right now and also has a robust e-commerce presence, and that is Target (TGT 1.57%).
Target, interestingly enough we've been talking about how a lot of companies have had a really hard time finding the workers that they need. I had seen an article out I believe last month on CNN about how Target is not having issues staffing their stores in general nor for the holiday season. They expect to hire, I believe it was about 100,000 seasonal workers.
They're doing very well in that sense. I think that they have raised incentives and wages in some cases to attract new talent. But another thing is the company has a really strong presence for in-store sales as well as a fast-growing online presence. In the most recent quarter, Target's comparable sales, those were up nearly 13% year over year. And that was on top of nearly 21% growth last year.
The company noted the comparable-sales growth, that was driven entirely by traffic. Store comparable sales increased 9.7% while digital comparable sales increased 29% year over year. But that was on top of growth of 155% digital comparable-sales growth last year.
All five core merchandise categories generated double-digit comparable-sales growth on top of strong sales performances last year. A couple of other things to note, Target's third-quarter GAAP [generally accepted accounting principles] earnings per share, that was up about 52% year over year while adjusted earnings per share, those were up about 9% year over year.
The company's net earnings in the first nine months of 2021, that totaled about $5.4 billion compared to about $3 billion in the same period in 2020. I'm not one usually to be particularly interested in brick-and-mortar stocks.
But Target, besides being a faithful dividend payer, has also really managed to navigate this space of a dueling brick-and-mortar presence that is thriving along with a really robust online presence. I believe that's an interesting one to watch, and I think that's also one of that could benefit from these trends that we're seeing.