Top 5 Retail Stocks to Buy Now

3. The Home Depot, Inc. (NYSE:HD)

Home improvement retailer The Home Depot, Inc. (NYSE:HD) has been one of hedge funds’ favorite retail stocks for years, peaking at the end of 2019 with 90 funds long HD. That figure had fallen to 73 by the end of Q3 however, with some hedge funds perhaps fearing that the housing market would suffer during the pandemic.

HD bull Ensemble Capital expressed as much in its Q1 investor letter, anticipating that the housing market would come to a standstill during the crisis, but would explode once more coming out of it. That hasn’t been the case however and Home Depot has continued to perform extremely well, growing sales by 23% and earnings by 26% in Q3.

Ensemble Capital also noted that while Home Depot would survive the pandemic, mom-and-pop hardware stores were less likely to do so, allowing Home Depot to further grow its market share at the same time home improvement activity begins surging again.