In this article, we will look at the 7 Most Undervalued Retail Stocks to Invest In Now.
On March 27, WSJ’s Gunjan Banerji appeared on CNBC’s ‘Power Lunch’ to talk about how retail investors are behaving, and more. She stated that we have seen a shift in the first quarter of 2026. Almost every time we have seen retail buying every dip, pouncing on those opportunities. Now, however, we saw them sell the rip on Monday during the big stock surge, according to JPMorgan, and we are seeing decreased activity.
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She further said that Bloomberg data shows that retail investors recently made up around 18% of stock trading activity, which is down from the fourth quarter and one of the lowest levels since 2024. These trends made the past week the slowest week for retail buying in four months, according to JPMorgan, with volumes down more than 50% from their levels before the Iran war.
Banerji also cited Elon Musk, stating that no one has been more influential with retail investors than him, as he holds a “tremendous power” to ignite enthusiasm among individual investors. With these broader market trends in view, let’s look at the most undervalued retail stocks to invest in now.
A retail store employee demonstrating the features of a video game console.
Our Methodology
We used stock screeners to make a list of retail stocks with a forward P/E under 15 and picked 7 stocks with the highest number of hedge fund holders, as of Q4 2025. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund holders.
Note: All data was recorded on March 30.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
7 Most Undervalued Retail Stocks to Invest In Now
7. Kohl’s Corporation (NYSE:KSS)
Kohl’s Corporation (NYSE:KSS) is one of the most undervalued retail stocks to invest in now. On March 10, Evercore ISI cut the price target on Kohl’s Corporation (NYSE:KSS) to $18 from $21, reaffirming an In Line rating on the shares. The firm believes that the company’s fiscal Q1 same-store sales underwent improvement from the fiscal Q4, down 2% exit rate, and sees “a credible path” for trends to improve in the second half. However, Evercore told investors that in the near term, it expects the stock to be “caught in a tug-of-war” between higher tax refunds and stimulus against weather impacts and higher gas prices.
Kohl’s Corporation also received a rating update from Citi on March 13, with the firm lowering the price target on the stock to $14 from $20 while reiterating a Neutral rating on the shares. The firm told investors in a research note that Kohl’s Corporation missed sales and gross margin estimates in fiscal Q4, and it believes the company is not well-positioned to handle macro volatility. Citi sees a balanced risk/reward at current share levels.
Kohl’s Corporation is involved in the operation of family-oriented department stores, with its business line including footwear, apparel, and accessories for women, men, and children, beauty products, home products, and more.
6. Abercrombie & Fitch Co. (NYSE:ANF)
Abercrombie & Fitch Co. (NYSE:ANF) is one of the most undervalued retail stocks to invest in now. On March 26, Needham initiated coverage of Abercrombie & Fitch Co. with a Buy rating and a $108 price target. The firm told investors in a research note that the company’s fundamentals are stabilizing after a challenging fiscal 2025, with the Abercrombie brand’s comp sales “dramatically” improving in recent quarters. According to the firm, they could bounce back into positive territory soon, and thus it sees a “compelling risk/reward” at current valuation levels.
In another development, Jefferies cut the price target on Abercrombie & Fitch Co. to $130 from $135 on March 4, but maintained a Buy rating on the shares. It told investors that while the company delivered “a solid Q4” and FY27 guidance implying 3%-5% sales growth and double-digit margins despite tariffs, it is also important to note that the fiscal Q1 ERP disruption and continued tariff headwinds add uncertainty. Still, the firm believes that the underlying earnings power is “sustainable”, adding that it sees the current volatility creating an opportunity.
Abercrombie & Fitch Co. 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 include Abercrombie & Fitch and abercrombie kids, and Hollister brands, including Hollister and Gilly Hicks.
5. Macy’s, Inc. (NYSE:M)
Macy’s, Inc. (NYSE:M) is one of the most undervalued retail stocks to invest in now. On March 19, Telsey Advisory cut the price target on Macy’s, Inc. (NYSE:M) to $20 from $25 while reaffirming a Market Perform rating on the shares and telling investors that the company ended 2025 on a strong note. Its fiscal Q4 results were ahead of guidance and consensus, and the firm expects factors such as strong merchandising, marketing, and execution to deliver meaningful momentum into 2026.
Macy’s, Inc. also received a rating update from JPMorgan on March 18. The firm cut the price target on the stock to $21 from $24 and maintained a Neutral rating on the shares. The rating update came after the company’s fiscal Q4 earnings report and the firm’s follow-up call with the CFO. Management stated that winter storms in late January did affect the quarterly results, which compared to the strength observed during the holiday period. JPMorgan further stated that looking over the balance of the year, its math “points to upside opportunity” in Q2-Q4 for same-store sales growth of low single digits.
Macy’s Inc. is an omnichannel retail store that manages three brands: Macy’s, Bloomingdale’s, and Bluemercury. These brands sell a variety of merchandise, including accessories, apparel, consumer goods, home furnishings, and more. The company operates stores in 43 US states, the District of Columbia, Guam, and Puerto Rico.
4. Victoria’s Secret & Co. (NYSE:VSCO)
Victoria’s Secret & Co. (NYSE:VSCO) is one of the most undervalued retail stocks to invest in now. Victoria’s Secret & Co. received several rating updates following its fiscal Q4 and full-year 2025 earnings release on March 5. TD Cowen cut the price target on the stock to $58 from $60 on March 6, reiterating a Hold rating on the shares and updating its model after fiscal Q4 results showed improving brand resonance. The same day, Barclays also lowered the price target on Victoria’s Secret & Co. to $67 from $80 while reaffirming an Overweight rating on the shares. The firm told investors in a research note that the company reported fiscal Q4 results that beat across the board, with the firm recommending buying the shares on weakness.
Victoria’s Secret & Co. reported that its fiscal Q4 and full year 2025 results exceeded top- and bottom- line guidance, with comparable sales rising 8% in fiscal Q4 and 5% for the full year.
Victoria’s Secret & Co. is a women’s intimates, apparel, and beauty products retailer. It operates under the Victoria’s Secret, Victoria’s Secret PINK, and Adore Me brands. The company’s product offerings include sleepwear, loungewear, swimwear, athleisure, lingerie, prestige fragrances, and body care.
3. American Eagle Outfitters, Inc. (NYSE:AEO)
American Eagle Outfitters, Inc. (NYSE:AEO) is one of the most undervalued retail stocks to invest in now. On March 26, Needham initiated coverage of American Eagle Outfitters, Inc. (NYSE:AEO) with a Hold rating, without assigning a price target to the stock. The firm stated that the company’s Aerie brand is doing “extremely well”, with shares inexpensive relative to history. However, it further told investors in a research note that it is awaiting more evidence of share catalysts before recommending the shares, adding that Aerie’s growth will likely slow as compares get significantly more difficult in the second half of the year.
In its fiscal Q4 and full year 2025 results, American Eagle Outfitters, Inc. reported that total revenue for the quarter rose 10% to a record $1.8 billion, driven by total comparable sales growth of 8% with positive results across brands. It also returned $341 million to shareholders in 2025 from $256 million in share repurchases and $85 million in dividends. The company’s fiscal 2026 operating income guidance is in the $390 million to $410 million range.
American Eagle Outfitters, Inc. is a global specialty retailer that offers clothing, accessories, and personal care products. Its brand portfolio includes American Eagle and Aerie brands. American Eagle operates as a jeans and apparel brand, while Aerie offers lifestyle items such as apparel, intimates, activewear, and swim collections.
2. PDD Holdings Inc. (NASDAQ:PDD)
PDD Holdings Inc. (NASDAQ:PDD) is one of the most undervalued retail stocks to invest in now. PDD Holdings Inc. (NASDAQ:PDD) was upgraded to Buy from Neutral by Nomura on March 26, with the firm keeping the price target the same at $136. It told investors in a research note that the “tactical” upgrade is due to “cheap valuation”, with the stock trading at “merely” 8.6-times expected 2026 earnings, and half of its market cap is in net cash.
The rating update came after PDD Holdings Inc. reported unaudited financial results for fiscal Q4 and the full year 2025 on March 25. Total revenues for fiscal Q4 2025 were RMB123,912.2 million (US$17,719.2 million), reflecting a growth of 12% from RMB110,610.1 million in the same quarter last year. Management attributed the growth to the increase in revenues from online marketing services and transaction services. Total revenues for the full year 2025 came up to RMB431,845.7 million (US$61,753.1 million), up 10% from RMB393,836.1 million in 2024, with the increase primarily due to the increase in revenues from online marketing services and transaction services.
PDD Holdings Inc. 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.
1. Lululemon Athletica Inc. (NASDAQ:LULU)
Lululemon Athletica Inc. (NASDAQ:LULU) is one of the most undervalued retail stocks to invest in now. Citi cut the price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $185 from $210 on March 23, reiterating a Neutral rating on the shares. The stock also received a rating update from BTIG on March 18, with the firm lowering the price target on Lululemon Athletica Inc. to $225 from $250 and reaffirming a Buy rating on the shares.
The rating updates came after the company reported its fiscal Q4 and full-year results, with BTIG also citing below-consensus Q1 guidance. The firm told investors in a research note that although Lululemon Athletica Inc.’s fiscal Q4 results exhibited signs of sequential top-line progress in the Americas, Q1 guidance points towards a sequential step back as the company takes the early steps to return to historical levels of full-price selling. It further stated that while the 2026 guidance is below consensus, the outlook is still not reflective of a hard reset on the business.
Founded in 1988, Lululemon Athletica Inc. is a luxury athletic apparel, footwear, and accessories retailer. It sells leisure-athletic wear and accessories such as socks, bags, and yoga mats for fitness activities.
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