5 Best Department Store Stocks To Invest In

In this article, we discuss 5 best department store stocks to buy. If you want to read our discussion on the department store landscape, head over to 11 Best Department Store Stocks To Invest In. 

5. Albertsons Companies, Inc. (NYSE:ACI)

Number of Hedge Fund Holders: 57

Albertsons Companies, Inc. (NYSE:ACI) operates food and drug stores in the United States, providing a range of products such as groceries, general merchandise, health and beauty items, pharmacy services, fuel, and other goods. Albertsons Companies, Inc. (NYSE:ACI) is one of the best department store stocks to invest in. 

On January 9, Albertsons Companies, Inc. (NYSE:ACI) reported results for the third quarter of fiscal 2023, which ended December 2, 2023. The company announced a non-GAAP EPS of $0.79 and a revenue of $18.56 billion, outperforming Wall Street estimates $0.13 and $200 million, respectively. 

According to Insider Monkey’s fourth quarter database, 57 hedge funds were long Albertsons Companies, Inc. (NYSE:ACI), compared to 53 funds in the prior quarter. Stephen Feinberg’s Cerberus Capital Management is the largest stakeholder of the company, with 151.8 million shares worth $3.5 billion. 

4. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 57

Costco Wholesale Corporation (NASDAQ:COST) is one of the best department store stocks to watch. On March 7, Costco Wholesale Corporation (NASDAQ:COST) announced its operating results for the quarter ended February 18, 2024. The company reported a non-GAAP EPS of $3.71, beating market consensus by $0.07. However, the revenue of $58.44 billion missed Wall Street estimates by $690 million. 

According to Insider Monkey’s fourth quarter database, 57 hedge funds were bullish on Costco Wholesale Corporation (NASDAQ:COST), compared to 65 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the biggest position holder in the company, with 2.8 million shares worth $1.8 billion. 

Madison Sustainable Equity Fund stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its fourth quarter 2023 investor letter:

“Costco Wholesale Corporation (NASDAQ:COST) reported solid holiday results and announced a special dividend of $15 per share. Earnings were better than expected driven by better gross margin. Same store sales were 3.9% with solid traffic. Costco also noted better discretionary trends and solid seasonal sales.”

3. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 58

Target Corporation (NYSE:TGT) is an American general merchandise retailer, ranking 3rd on our list of the best department store stocks. On March 5, Target Corporation (NYSE:TGT) reported a Q4 non-GAAP EPS of $2.98, beating market consensus by $0.56. The revenue of $31.47 billion, however, fell short of Street estimates by $400 million. 

According to Insider Monkey’s fourth quarter database, 58 hedge funds were bullish on Target Corporation (NYSE:TGT), same as the prior quarter. Ric Dillon’s Diamond Hill Capital is a significant position holder in the company, with 2.8 million shares worth over $401 million. 

Diamond Hill Large Cap Strategy stated the following regarding Target Corporation (NYSE:TGT) in its fourth quarter 2023 investor letter:

“Other top contributors in Q4 included Allstate, American International Group (AIG) and Target Corporation (NYSE:TGT). US-based mass retailer Target is capitalizing on cleaner inventory, lower freight costs and improved efficiency to improve profitability — and investors rewarded shares accordingly in Q4.”

2. The TJX Companies, Inc. (NYSE:TJX)

Number of Hedge Fund Holders: 62

The TJX Companies, Inc. (NYSE:TJX) is an off-price apparel and home fashions retailer operating in the United States, Canada, Europe, and Australia. On February 28, The TJX Companies, Inc. (NYSE:TJX) announced that it plans to declare a quarterly dividend of $0.375 per share, reflecting a 13% increase from the previous dividend of $0.3325 per share. The expected dividend declaration is scheduled for April 2024, with payments due in June 2024. Additionally, the company announced a share repurchase plan of approximately $2 billion to $2.5 billion during the fiscal year ending February 1, 2025.

According to Insider Monkey’s fourth quarter database, 62 hedge funds held stakes in The TJX Companies, Inc. (NYSE:TJX), compared to 71 funds in the prior quarter. Alkeon Capital Management is the largest stakeholder of the company, with 4.86 million shares worth $456.3 million. 

Madison Investments U.S. Equity Strategy stated the following regarding The TJX Companies, Inc. (NYSE:TJX) in its fourth quarter 2023 investor letter:

“Whether it’s performance by market capitalization, sectors, or any other factor, stock markets are intrinsically cyclical. Some cycles are long-term, taking decades to unfold, and some are short-term, lasting months, weeks, or even days. Many are medium in length, lasting two, three, or several years. Most cycles occur because a trend often creates the seeds of its own reversal. We at Madison Investments are certain that market cycles will occur, but it doesn’t mean we can predict their timing or magnitude. We don’t think we can. This is perhaps a major difference between us and many other investors. Most investors believe it’s their job to time market cycles despite overwhelming evidence that it’s nearly impossible to do so with enough accuracy to make such an effort profitable over long periods. We avoid making calls about market cycles and spend zero minutes thinking about them, not because we don’t think they can be important, but because we think they’re inherently unpredictable in duration.

This mentality of our team is generally true for other kinds of cycles, such as macroeconomic, industry, or company-specific, but is a bit more nuanced for those. We make no explicit prediction about cycles on which we base a buy or sell decision. Still, we are acutely aware of the various cyclical forces at work, and depending on whether we think we have the ability to assess the length or intensity of such, we may incorporate them to various degrees.

Let’s use a few examples to illustrate our point. We’ve been invested in off-price retailer The TJX Companies, Inc. (NYSE:TJX) for just under ten years, having invested in 2014 in our Large Cap strategy. TJX is one of the most recession-resistant companies we own due to its perennial value proposition to customers; customers always like to save money, especially when economic times get tough. As a result, the company has had an exceedingly steady revenue and earning profile over the past several decades…” (Click here to read the full text)

1. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 85

Walmart Inc. (NYSE:WMT) ranks 1st on our list of the best department stores to invest in. On February 20, Walmart Inc. (NYSE:WMT) reported a Q4 non-GAAP EPS of $1.80 and a revenue of $173.4 billion, outperforming Wall Street estimates by $0.15 and $4.14 billion, respectively. The company also declared a $0.2075 per share quarterly dividend, a 9.2% increase from the prior dividend. The dividend is payable on April 1, to shareholders on record as of March 15. 

According to Insider Monkey’s fourth quarter database, 85 hedge funds were bullish on Walmart Inc. (NYSE:WMT), compared to 80 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 28.6 million shares worth $1.5 billion.

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