Five key players in the retail market include Walmart (NYSE:WMT), Kroger (NYSE:KR), Costco (NASDAQ:COST), and Target Corporation (NYSE:TGT). In addition to the four, Amazon (NASDAQ:AMZ) is a worthy contender as it rises to become the largest retailer even though it is categorized in technology. In this analysis, we answer the question about which of the five stocks is the best buy.
Investors are interested in making the highest return on investment. In the retail industry, Target returned the highest at 145.13%. Costco posted the second-highest gains at 129%. At a distant third position, Kroger reported 76% in gains since 2019, while Amazon came fourth with 69.55% in total gains. Walmart, despite being the largest retailer, netted 51.7% in capital market gains since September 2019. This basic-level analysis shows that investors were better off holding Target.
Target is the best performer in the retail sector
Source – TradingView
The returns are historical and may not give much information about whether the stocks are viable buys at the moment. Baseline analysis, however, may help demonstrate the direction the stocks are likely to take.
At a price of $145, Walmart is trading above the baseline of $120. The stock is also facing resistance at $150, and the RSI at 54 is quickly moving towards the overbought region.
Amazon is trading at a price of $3324 above the baseline of $2575. The resistance is at $3600 and the RSI at 54. Though increasing, the price is likely to pull back.
The Kroger Company at $56 market valuation is above the baseline of $40. The RSI of 68.35 indicates the stock is in the overbought region. Consequently, the price can be expected to pull back to the baseline.
In the case of Costco, the current price is $555, while the support determined by baseline is at $400. The RSI at 63 is already showing signs of declining momentum.
Lastly, Target Corporation with a valuation of $217 is also above the baseline support of $160. The RSI at 46.80 is showing signs of an upward trajectory in the pricing of the stock. As to how high TGT can rise, the analysis finds that the stock would face resistance at $260.
Summary
While the stocks in the retail sector show spectacular returns, they are all currently trading at some of their highest levels. The relative strength indicators on almost all the stocks signal the potential decline in the valuations.
Together, these indicators point to bad market timing for investors. Investors need to wait for the stock prices to correct before taking a position in the retail industry. For investors who feel they must buy the sector in its current state, Target Corporation would be a better buy than all others.
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