In this article, we will take a look at the 5 cheap retail stocks to buy. To see more such companies, go directly to 10 Cheap Retail Stocks to Buy.
5. Lululemon Athletica Inc. (NASDAQ:LULU)
Number of Hedge Fund Holders: 65
One-Year Average Price Estimate: $398.02
Athletic apparel retailer Lululemon Athletica Inc. (NASDAQ:LULU) ranks 5th in our list of cheap retail stocks to buy. Lululemon Athletica Inc. (NASDAQ:LULU) recently posted strong Q4 results.
Stifel analyst Jim Duffy after the results reiterated his Buy rating on Lululemon Athletica Inc. (NASDAQ:LULU) and increased his price target to $460 from $450. The analyst said he reaffirms his “conviction in Lululemon Athletica Inc. (NASDAQ:LULU) as a core growth holding and continues to view shares undervalued.”
On the other hand, Bank of America analyst Lorraine said the strong sales data from the quarter shows that the inventory issues could be resolved organically without any need of promotions.
Insider Monkey’s proprietary database of 943 hedge funds shows that 65 hedge funds had stakes in Lululemon Athletica Inc. (NASDAQ:LULU) as of the end of the fourth quarter of 2022, up from 57 hedge funds in the previous quarter. The biggest stakeholder of Lululemon Athletica Inc. (NASDAQ:LULU) was
4. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 68
One-Year Average Price Estimate: $229
With a solid dividend growth history and robust business, Lowe’s Companies, Inc. (NYSE:LOW)’s has long-term growth potential, according to analysts. Lowe’s Companies, Inc. (NYSE:LOW)’s one-year average analyst price target is $229, while its stock price as of April 4 was around $200.
Recently, Evercore ISI added the stock to its Core Ideas List. Lowe’s Companies, Inc. (NYSE:LOW) also featured on Bank of America’s US 1 List, which represents BofA’s best investment ideas for the long term.
At the end of the fourth quarter of 2022, 68 hedge funds had stakes in Lowe’s Companies, Inc. (NYSE:LOW), according to Insider Monkey’s database of 943 hedge funds. This makes Lowe’s Companies, Inc. (NYSE:LOW)’s one of the most popular retail stocks among elite hedge funds.
Baron Funds made the following comment about Lowe’s Companies, Inc. (NYSE:LOW) in its Q3 2022 investor letter:
“Lowe’s Companies, Inc. (NYSE:LOW) is the second-largest home improvement center in the U.S. The company has several competitive advantages including scale, distribution efficiencies, interconnected retail through stores/internet, excellent management, and a strong balance sheet. The company is valued at only 14 times estimated earnings per share versus its long-term average P/E multiple of approximately 18 times estimated earnings per share.
The shares of Lowe’s Companies, Inc. increased 7% in the most recent quarter following better better-than-expected quarterly business results. Lowe’s is the second largest home improvement center in the U.S. The company has several competitive advantages including scale, distribution efficiencies, interconnected retail through stores/internet, excellent management, and a strong balance sheet. We believe the shares are attractively valued at only 14 times estimated earnings per share versus a long-term average P/E multiple of approximately 18 times estimated earnings per share.”
3. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 70
One-Year Average Price Estimate: $112.71
CVS Health Corporation (NYSE:CVS) was trading at around $76 as of mid-day trading on April 5, while the stock’s one-year price target by analysts is $112.71. This price target shows a strong upside potential from current levels. CVS Health Corporation (NYSE:CVS) is also a dividend payer. CVS Health Corporation (NYSE:CVS) recently declared a quarterly dividend of $0.605 per share. CVS Health Corporation (NYSE:CVS)’s dividend yield stands at over 3%. The latest dividend is payable on May 1 to shareholders of record as of April 21.
At the end of the fourth quarter of 2022, 70 hedge funds tracked by Insider Monkey held stakes in CVS Health Corporation (NYSE:CVS). The most notable stakeholders of CVS Health Corporation (NYSE:CVS) are AQR Capital Management ($396 million), Bridgewater Associates ($255 million) and Adage Capital Management ($125 million).
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 113
One-Year Average Price Estimate: $145.76
Alibaba Group Holding Limited (NYSE:BABA) has been in the headlines lately after media reports suggested the company plans to split into six publicly traded units. Latest reports say Alibaba Group Holding Limited (NYSE:BABA)’s $20 billion logistics division, Cainiao Network Technology, may be the first of the six units to launch an IPO. Alibaba Group Holding Limited (NYSE:BABA) is launching its restructuring after the comeback of Jack Ma. Alibaba Group Holding Limited (NYSE:BABA)’s average analyst estimate stands at $145.76, which presents a significant upside potential from its current levels.
As of the end of the fourth quarter of 2022, 113 hedge funds tracked by Insider Monkey had stakes in Alibaba Group Holding Limited (NYSE:BABA). The total value of these stakes was about $5.7 billion. The biggest stakeholder of Alibaba Group Holding Limited (NYSE:BABA) was Philippe Laffont’s Coatue Management which had a $441 million stake in the company.
Polen Capital made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its October investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) is the leading e-commerce company in China. The stock was weak over the quarter as they reported a quarterly revenue decline. The company has been heavily impacted by the continued covid-19 lockdowns throughout China and the aggressive rate increases and deteriorating outlook for China’s economy have weighed heavily on the stock. The share price has also been under pressure due to the U.S. Securities and Exchange Commission’s plans to delist Chinese tech stocks in 2024 if they do not provide access to audit files.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 240
One-Year Average Price Estimate: $133
Over the past one-year Amazon.com, Inc. (NASDAQ:AMZN) has lost about 38% in value through April 5. Many analysts believe this share price decline has created an attractive entry point on Amazon.com, Inc. (NASDAQ:AMZN) shares. Recently, Evercore ISI’s Mark Mahaney said in a note that the long-term bull thesis for Amazon remains “very much intact” and urged investors to show patience as Amazon.com, Inc. (NASDAQ:AMZN) navigates challenges. The analyst expects Amazon.com, Inc. (NASDAQ:AMZN)’s retail segment to post margin recovery in the first half of 2023. The analyst said that he views Amazon.com, Inc. (NASDAQ:AMZN) as “classic DHG (Dislocated High Quality) stock.”
Renaissance Large Cap Growth Strategy made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2022 investor letter:
“On the negative side, Amazon.com, Inc. (NASDAQ:AMZN) was our worst performing stock in the quarter. The company is finally seeing the consumer and enterprise weakness that other companies encountered earlier in the year. In addition, AWS growth decelerated in the third quarter, with management citing new pricing pressures as competitors look to gain market share. We found Amazon’s comments on cost controls and employee layoffs concerning, given the company’s historical propensity to invest in all macroeconomic environments. Management’s comments that the macro-economic slowdown was more sudden than expected is also concerning, especially since they do not expect an improvement in consumer trends anytime soon.”
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