US retail stocks are in focus this week after the Bureau of Labour Statistics said that inflation was up slightly less-than-expected in April.
Inflation data tends to be significant for retail stocks as it directly influences consumer purchasing power and overall business costs.
According to Stephanie Link, the chief investment strategist, a handful of the US retail stocks are particularly well-positioned to own after April’s CPI reading.
Her top picks include Walmart, Amazon, and Costco.
Walmart Inc (NYSE: WMT)
Walmart missed revenue expectations in its fiscal first quarter and warned this week that it will begin raising prices in response to tariffs.
The company cited increased import costs stemming from the US administration’s trade policies and indicated that consumers could start seeing the impact as early as the end of May.
Still, Stephanie Link remains bullish as ever on the retail giant as a 4.5% increase in same-store sales in the US suggests “they’re crushing it.”
Plus, the NYSE-listed firm is “being conservative on guidance,” she added.
Link sees WMT as strongly positioned to absorb the tariffs-driven costs, thanks to its fortress of a balance sheet.
On CNBC’s “Squawk Box”, she dubbed Walmart an all-weather stock as 72% of its sales come from consumables.
Finally, a close to 1% dividend yield tied to WMT shares makes them all the more exciting to own in 2025.
Amazon.com Inc (NASDAQ: AMZN)
Hightower’s chief investment strategist favours owning Amazon for retail exposure this year since it continues to grow its market share in eCommerce and has a strong presence globally.
According to Stephanie Link, Amazon’s scale positions it well to absorb tariff-related increases in costs.
This could even help insulate the multinational from rising competition from the likes of Temu and Shein.
All in all, if the US economy “continues to chug along and the consumer doesn’t die,” investors will remain interested in Amazon stock in 2025, she argued in a recent interview.
Note that AMZN shares are currently down more than 15% versus their year-to-date high, which makes them appealing in terms of valuation as well.
Costco Wholesale Corp (NASDAQ: COST)
Stephanie Link counts Costco stock among her top picks for 2025 as it’s exceptionally positioned to navigate an uncertain macro environment.
She recommends owning COST this year for the strength of its membership model, as it’s known to drive customer loyalty that translates to consistent revenue streams.
Additionally, the retail behemoth’s efficient supply chain and bulk pricing strategy help it maintain profitability even in challenging economic conditions.
Like Walmart, Costco is a dividend-paying stock, currently offering a yield of 0.51%—another compelling reason to consider adding it to your portfolio.
Wall Street agrees with Link on Costco stock as well, given the consensus rating currently sits at “overweight” with price targets going as high as $1,205, indicating potential upside of more than 20% from current levels.
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