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.
11. Abercrombie & Fitch Co. (NYSE:ANF)
Forward P/E: 7.23
Number of Hedge Fund Holders: 42
Abercrombie & Fitch Co. (NYSE:ANF) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 16, JPMorgan lowered the firm’s price target on Abercrombie & Fitch Co. (NYSE:ANF) to $141 from $147, keeping an Overweight rating on the shares. The firm adjusted the company’s model after management’s roadshow. Despite the downward reduction, the firm believes in the company’s potential to perform positively, reinforcing the overweight rating.
In other news, Abercrombie & Fitch Co. (NYSE:ANF) reported record net sales in its fiscal Q1 2025 earnings, reaching $1.1 billion and exceeding outlook with an 8% growth. Net sales growth occurred across regions, with EMEA up 12%, Americas showing a 7% growth, and APAC rising 5%.
Abercrombie & Fitch Co.’s (NYSE:ANF) results were supported by brand performance from Hollister, which grew 22%. Abercrombie brands, however, were down 4% compared to last year.
Abercrombie & Fitch Co. (NYSE:ANF) is a global omnichannel retailer that offers an assortment of apparel, personal care products, and accessories for women, men, and kids. Its brand portfolio includes Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister brands, including Hollister and Gilly Hicks.
10. Victoria’s Secret & Co. (NYSE:VSCO)
Forward P/E: 9
Number of Hedge Fund Holders: 46
Victoria’s Secret & Co. (NYSE:VSCO) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 12, Morgan Stanley raised the firm’s price target on Victoria’s Secret & Co. (NYSE:VSCO) to $20 from $19, keeping an Equal Weight rating on the shares. The analyst updated the rating after Victoria’s Secret & Co. (NYSE:VSCO) reported its fiscal Q1 2025 earnings on June 11, with net sales of $1.353 billion that surpassed its previous guidance range.
The analyst told investors that the fiscal year EPS guidance was lowered completely due to tariffs and is “potentially not fully de-risked.” However, he also said that the Q2 guidance appears “fair/possibly beatable,” leaving the report “incrementally positive” due to management’s “enhanced understanding of the evolved intimates industry.”
He further reasoned that a turnaround “likely takes some time,” and that justifies the Equal Weight rating for now.
9. Albertsons Companies, Inc. (NYSE:ACI)
Forward P/E: 10.03
Number of Hedge Fund Holders: 52
Albertsons Companies, Inc. (NYSE:ACI) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On May 9, Wells Fargo analyst Edward Kelly maintained a Buy rating on Albertsons Companies, Inc. (NYSE:ACI) and set a price target of $27.00.
The company’s fiscal Q4 2024 results showed notable improvements supporting the rating, with identical sales rising 2.3% and digital sales growing 24%. Albertsons Companies, Inc. (NYSE:ACI) also reported 15% growth in its loyalty members to 45.6 million, along with a net income of $172 million.
Albertsons Companies, Inc. (NYSE:ACI) also recently announced the expansion of its business eCommerce platform to more than 2,00 stores, including Star Market, Shaw’s, Albertsons, ACME, Tom Thumb, and more. The company is leveraging its diverse product selection and extensive store network to reach this significant customer base in the market.
Albertsons Companies, Inc. (NYSE:ACI) is a US-based food and drug retailer. It has over 2,269 stores across 34 states and the District of Columbia under 20 banners, including Star Market, Shaw’s, Albertsons, Kings Food Markets, United Supermarkets, Haggen, Kings Food Markets, Acme, Carrs, and more.
8. Bath & Body Works, Inc. (NYSE:BBWI)
Forward P/E: 7.23
Number of Hedge Fund Holders: 54
Bath & Body Works, Inc. (NYSE:BBWI) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. Analyst Alexandra Straton from Morgan Stanley maintained a Buy rating on Bath & Body Works, Inc. (NYSE:BBWI) on May 30, slashing the price target to $41 from $43. The analyst based the rating on the company’s potential for future growth following its fiscal Q1 2025 earnings report.
Straton exited the Q1 report with “a more negative tilt to our Overweight rating,” stating that there are several reasons behind the negative stock reaction after earnings. These include lesser-than-expected insulation from tariffs, the Q2 guidance suggesting a quarter-over-quarter sales deceleration, and a “noisier” reiteration of fiscal year guidance.
However, the analyst acknowledged that Bath & Body Works, Inc. (NYSE:BBWI) holds the potential to attain positive earnings per share revisions by 2025. Straton supported this optimistic outlook by highlighting the company’s favorable market position, citing its higher category growth and profitability compared to its peers in the Specialty Retail sector.
Bath & Body Works, Inc. (NYSE:BBWI) is a specialty omnichannel retailer specializing in personal care and home fragrance. It sells its merchandise under Bath & Body Works, White Barn, and other brands. Bath & Body Works, Inc. (NYSE:BBWI) sells its merchandise in around 1,850 company-operated stores and e-commerce sites across the US and Canada.
7. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Forward P/E: 6.81
Number of Hedge Fund Holders: 60
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) announced a definitive agreement to be acquired by Sycamore Partners in March in a transaction valued at up to $23.7 billion. The transaction is expected to position the company for long-term success and maximize shareholder value.
Sycamore’s expertise in retail and consumer investments is also anticipated to position Walgreens Boots Alliance, Inc. (NASDAQ:WBA) to further enhance customer experience and become the leading choice for retail, pharmacy, and health services. Shareholders would have the opportunity to support the transaction at the upcoming Special Meeting of Shareholders on July 11, 2025.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an American multinational company providing retail, pharmacy, and healthcare services. The company has approximately 12,500 locations across the US, Europe, and Latin America. Its brand portfolio includes well-known brands such as Walgreens, Boots, Duane Reade, and Benavides.
6. Target Corporation (NYSE:TGT)
Forward P/E: 12.96
Number of Hedge Fund Holders: 62
Target Corporation (NYSE:TGT) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 4, TD Cowen analyst Oliver Chen maintained a Hold rating on Target Corporation (NYSE:TGT) and set a price target of $105.00. The company reported net sales of $23.8 billion in fiscal Q1 2025, down from $24.5 billion in fiscal Q1 2024. However, digital comparable sales rose 4.7%, reflecting growth of over 35% in same-day delivery supported by Target Circle 360 and continued growth in Drive Up.
On June 12, Target Corporation (NYSE:TGT) also announced a quarterly dividend of $1.14 per common share, reflecting a 1.8% growth from the previous quarterly dividend of $1.12. This rise makes 2025 the 54th consecutive year of annual dividend growth in the company’s history.
Target Corporation (NYSE: TGT) is a retail giant operating over 2,000 discount department stores and hypermarkets across the United States and Canada.
5. The Kroger Co. (NYSE:KR)
Forward P/E: 13.78
Number of Hedge Fund Holders: 64
The Kroger Co. (NYSE:KR) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. Telsey Advisory analyst Jason Strominger maintained a Buy rating on The Kroger Co. (NYSE:KR) on June 13 and set a price target of $73.00. The rating was announced before the company releases its fiscal Q1 2025 financial and operational results on June 20.
The company’s fiscal Q4 2024 results also show positive operations, with identical sales (excluding fuel) for the quarter rising by 2.4%. It achieved an 11% digital sales growth, excluding the 53rd week in 2023.
The Kroger Co. (NYSE:KR) also delivered a 1.5% growth in identical sales, excluding fuel, for the full fiscal year 2024 and commenced a $5.0 billion Accelerated Share Repurchase Program set to be completed under its $7.5 billion share repurchase authorization. The company’s full-year 2025 guidance indicates identical sales in the 2% to 3% range, excluding fuel.
4. JD.com, Inc. (NASDAQ:JD)
Forward P/E: 7.7
Number of Hedge Fund Holders: 66
JD.com, Inc. (NASDAQ:JD) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. In a report released on May 27, Andre Chang from J.P. Morgan maintained a Buy rating on JD.com, Inc. (NASDAQ:JD) with a price target of HK$165.00.
JD.com, Inc. (NASDAQ:JD) reported optimistic fiscal Q1 2025 results that support the buy rating, with net revenue for the quarter reaching RMB301.1 billion and reflecting an increase of 15.8% compared to fiscal Q1 2024. It also reported RMB 10.5 billion (US$1.5 billion) in income from operations, up from RMB 7.7 billion in the same period last year. Operating margin for the quarter was 3.5%, compared to 3.0% in fiscal Q1 2024.
JD.com, Inc. (NASDAQ:JD) is an e-commerce company that deals with online retail and online marketplace through its retail website and mobile application. Its operations are divided into four segments: JD Retail, JD Logistics, Dada, and New Businesses segment.
3. CVS Health Corporation (NYSE:CVS)
Forward P/E: 11
Number of Hedge Fund Holders: 73
CVS Health Corporation (NYSE:CVS) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 5, Wells Fargo analyst Stephen Baxter maintained a Buy rating on CVS Health Corporation (NYSE:CVS) and set a price target of $84.00.
The company’s fiscal Q1 2025 results support the Buy rating, with total revenues increasing by 7% compared to last year to $94.6 billion. Generated cash flow from operations for the quarter reached $4.6 billion.
CVS Health Corporation (NYSE:CVS) also reported GAAP diluted EPS of $1.41, up from $0.88 in the prior year, and adjusted EPS of $2.25 for fiscal Q1 2025, up from $1.31 in the prior year. This rise was attributed to growth in the operating results of the Health Care Benefits segment.
The company revised its GAAP diluted EPS guidance range to $4.23 to $4.43 from $4.58 to $4.83. CVS Health Corporation (NYSE:CVS) also raised its adjusted EPS guidance range to $6.00 to $6.20 from $5.75 to $6.00.
CVS Health Corporation (NYSE:CVS) is a health solutions company that operates in four segments: healthcare benefits, health services, pharmacy & consumer wellness, and corporate/other. Apart from being a prominent pharmacy chain, the company is one of the largest health insurers in the United States through its Aetna subsidiary’s operations.
2. PDD Holdings Inc. (NASDAQ:PDD)
Forward P/E: 11.8
Number of Hedge Fund Holders: 87
PDD Holdings Inc. (NASDAQ:PDD) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 4, Reuters reported that the global discount e-commerce platform Temu, which is owned and operated by PDD Holdings Inc. (NASDAQ:PDD), reported a notable 48% drop in its daily US users in May compared to March.
The drop occurred after the United States closed the “de minimis” loophole on May 2, which allowed Chinese companies to deliver low-value packages to the United States without incurring tariff obligations.
The closure of de minimis led to Temu slashing its ad spending in the United States and shifting its strategy associated with order fulfillment. Engagement on the platform dropped considerably after the end of the exemption, as stated by Simeon Gutman, Morgan Stanley equity analyst, in a May note. Gutman further stated:
“While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu’s competitive threat will continue to weaken.”
PDD Holdings Inc. (NASDAQ:PDD) is a Chinese multinational online commerce group and retailer that owns and operates a range of diverse businesses. It also has a strong logistics, sourcing, and fulfillment capabilities network that supports its operations. The company owns Pinduoduo, a popular online commerce platform in China, and also runs the fast-growing e-commerce marketplace Temu. Temu now operates in more than 50 countries worldwide.
1. Alibaba Group Holding Limited (NYSE:BABA)
Forward P/E: 11.41
Number of Hedge Fund Holders: 125
Alibaba Group Holding Limited (NYSE:BABA) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. Alibaba Group Holding Limited’s (NYSE:BABA) earnings for the March quarter and fiscal year 2025 showed a 7% year-over-year growth in revenue to RMB 236.454 billion ($32.584 billion).
Income from operations experienced a notable 93% year-over-year growth, reaching RMB 28.465 billion ($3.923 billion). This growth was attributed to a drop in non-cash share-based compensation expense and a rise in adjusted EBITA.
On May 27, Alibaba Group Holding Limited (NYSE: BABA) announced a strategic partnership with SAP SE to rev digital transformation and enterprise innovation through advanced cloud and AI technologies. The partnership would combine Alibaba Cloud’s scalable cloud infrastructure and advanced AI capabilities with SAP’s enterprise software.
The company announced that the collaboration would be initially focused on the Chinese market, but a rollout is planned for the Middle East, Southeast Asia, and Africa.
Alibaba Group Holding Limited (NYSE:BABA) manages and provides technology infrastructure and marketing platforms. It operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others segments.
While we acknowledge the potential of BABA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than BABA and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
