In this article, we will look at the 13 Most Undervalued Retail Stocks to Buy Right Now.
Survey Shows Retail Executives Expect President Trump to Walk Back Reciprocal Tariffs
On June 12, CNBC reported that new results from an AlixPartners survey show that most retail executives anticipate President Trump to walk back “reciprocal” tariffs on India, Vietnam, the EU, and the rest of the world. The executives may have adopted an optimistic outlook following the recent court challenges and initiatives between China and the US aimed at negotiating, as the outlook came after weeks of early deals, court challenges, and shifting trade policies.
Retail executives appear bullish on the “TACO trade,” which stands for “Trump Always Chickens Out” to refer to how his tariff moves are interpreted by markets. However, CNBC reported that according to AlixPartners managing director Sonia Lapinsky, countries like India and Vietnam do not hold as much leverage as China, which is why companies should continue chalking plans for other scenarios.
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The survey, conducted on June 1, polled executives from retailers, brands, and other consumer companies. Results showed that a majority of respondents expect President Trump to take back the steep duties imposed on India, Mexico, Vietnam, and the European Union after the 90-day pause concludes in July. Mexico wasn’t originally a part of the reciprocal tariffs imposed by the president but has since then incurred new levies from the administration. The survey respondents anticipate them to stay the same.
With the administration attempting to chalk out trade deals with individual nations, duties of around 10% are imposed on imports from a number of countries. Most of the survey respondents opined that these 10% tariffs are likely to remain in effect after the negotiations conclude, rather than the comparatively much higher levies that the president originally imposed on April 2.
With these trends in view, let’s look at the most undervalued retail stocks to buy right now.
A fashionable retail store showcasing the company’s apparel products.
Our Methodology
We used the Finviz stock screener to compile a list of retail stocks with a forward P/E ratio under 15 and selected the top 13 stocks most popular among elite hedge funds. The hedge fund data was sourced from Insider Monkey’s database, which tracks the moves of over 1000 elite money managers. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q1 2025.
Note: All data was sourced on June 16.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
13 Most Undervalued Retail Stocks to Buy Right Now
13. Macy’s, Inc. (NYSE:M)
Forward P/E: 6.37
Number of Hedge Fund Holders: 37
Macy’s, Inc. (NYSE:M) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On May 30, TD Cowen raised the firm’s price target on Macy’s, Inc. (NYSE:M) to $13 from $11 while maintaining a Hold rating on the shares. The rating update followed the company’s announcement of its fiscal Q1 2025 results on May 28, which reported net sales of $4.6 billion, surpassing its prior guidance range.
The company’s comparable sales dropped 2.0% on an owned basis and down 1.2% on an owned-plus-licensed-plus-marketplace basis, exceeding Macy’s, Inc.’s (NYSE:M) prior guidance range, attributed to better-than-anticipated performance across all nameplates.
The firm said that while Macy’s, Inc. (NYSE:M) reported a Q1 beat, its guidance was lowered on lower margins, justifying the Hold rating.
Macy’s Inc. (NYSE: M) is an omnichannel retail company that operates three brands: Macy’s, Bloomingdale’s, and Bluemercury. These brands offer a diverse range of merchandise, including accessories, apparel, consumer goods, home furnishings, and more.
12. The Gap Inc. (NYSE:GAP)
Forward P/E: 9.48
Number of Hedge Fund Holders: 41
The Gap Inc. (NYSE:GAP) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 5, Morgan Stanley Alexandra Straton maintained a Buy rating on The Gap Inc. (NYSE:GAP) with an associated price target of $27.00. The analyst based the rating on the company’s potential for growth and its strategic focus, stating that a significant factor supporting the optimistic outlook is management’s commitment to maintaining business health and consistency in the long term. This holds especially true when dealing with short-term challenges, including tariffs.
The analyst further reasoned that Gap Inc. (NYSE:GAP) has a transparent approach to both brand-specific and company-wide strategies, particularly in relation to competitive pricing and brand revitalization. This bolsters confidence in the company’s direction.
Gap Inc. (NYSE:GAP) also has the potential to expand its margins to historical levels over time, which Straton considers a key factor supporting the rating. The company’s improving profitability trajectories across all brands point at a promising development towards higher EBIT margins.
The Gap, Inc. (NYSE:GAP) is a specialty retailer in the US that offers apparel, accessories, and personal care products for women, men, and children. Its brand portfolio includes Old Navy, Gap, Banana Republic, and Athleta brands.
