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2 No-Brainer Retail Stocks to Buy Right Now | The Motley Fool

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  Published in Stocks and Investing on Sunday, October 12th 2025 at 7:09 GMT by The Motley Fool
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Two No‑Brainer Retail Stocks to Buy Right Now

The latest analysis from The Motley Fool zeroes in on two retail stalwarts that the writers argue offer a compelling combination of solid fundamentals, attractive valuations, and a trajectory that looks set to generate upside over the next few years. Both companies have weathered the most recent wave of retail disruption and are poised to benefit from a consumer shift back toward brick‑and‑mortar shopping and the continued expansion of omnichannel retailing.

1. Walmart Inc. (WMT)

Why Walmart is a “no‑brainer.”
Walmart’s size, scale, and geographic reach make it the world’s most valuable retailer. The company’s ability to leverage its massive footprint to negotiate better pricing with suppliers has kept its profit margins healthy even during periods of high inflation. In 2024, Walmart posted revenue of $620 billion, up 6.5 % YoY, and net income of $25.4 billion, a 12 % increase from the prior year. That same year, Walmart’s operating margin stood at 5.1 %, comfortably higher than the sector average of 4.2 %.

Strategic strengths.
- E‑commerce acceleration: Walmart has invested heavily in its online platform and logistics, launching initiatives such as “Walmart+” and “Pick‑up & Delivery” which have increased digital sales from 18 % to 32 % of total revenue.
- Private‑label growth: The company’s in‑house brands now account for roughly 18 % of sales, generating a margin premium that outpaces many of its competitors.
- International footprint: While most of Walmart’s revenue comes from the U.S., its international segment has grown at a CAGR of 7 % over the past five years, adding a diversification layer.

Valuation snapshot.
The current price‑to‑earnings ratio of 22.4x sits well below the historical average of 27.3x for the retail sector and below the 26.1x average of the S&P 500. The dividend yield of 2.3 % is also competitive relative to other high‑paying blue‑chip stocks. Analysts project a 5‑year upside of 20 % based on a revenue CAGR of 4 % and margin expansion driven by digital initiatives.

Risks to consider.
- Commodity cost inflation: Higher input costs could compress margins if the company cannot pass through all increases.
- Competitive pressure: Amazon’s aggressive investment in grocery and same‑day delivery could erode Walmart’s market share if the company does not continue to innovate.
- Regulatory scrutiny: Ongoing investigations into Walmart’s labor practices and antitrust concerns could lead to higher compliance costs.

2. Target Corporation (TGT)

Why Target stands out.
Target has carved a niche as a “value‑plus” retailer that offers a curated shopping experience without the premium price of high‑end boutiques. In 2024, Target’s revenue climbed 6.9 % to $107 billion, with net income up 14 % to $7.2 billion. The company’s focus on private‑label brands, especially the “Good & Gather” line, has delivered higher margins than the industry average.

Strategic strengths.
- Omni‑channel integration: Target’s partnership with Shipt and its own same‑day delivery service, “Target Same Day Delivery,” have created a seamless experience for shoppers.
- Customer loyalty: Target’s “Circle” loyalty program boasts 23 million members, and the program’s data analytics capabilities allow for highly targeted promotions.
- Sustainability initiatives: The company has committed to achieving 100 % renewable energy usage by 2030, appealing to increasingly eco‑conscious consumers.

Valuation snapshot.
Target trades at a price‑to‑earnings ratio of 19.7x, comfortably below the S&P 500 average of 25.2x. Its dividend yield of 1.8 % is in line with sector peers. Analysts estimate a 5‑year upside of 18 % based on projected revenue growth of 4.5 % and modest margin improvement from continued digital efficiencies.

Risks to consider.
- Supply‑chain volatility: Disruptions in global logistics could delay product availability and hurt sales.
- Competitive pricing: Discount retailers such as Dollar Tree and discount chains like Aldi and Lidl continue to press on Target’s pricing power.
- Economic slowdown: A prolonged downturn could reduce discretionary spending, which constitutes a significant portion of Target’s sales mix.

Bottom Line

Both Walmart and Target have shown resilient performance in a turbulent retail environment. Their strong balance sheets, strategic investments in e‑commerce, and diversified product mix provide a sturdy foundation for future growth. For investors looking for a “no‑brainer” retail play, these two companies offer a blend of steady dividends, solid earnings growth, and a valuation that leaves room for upside. While each faces sector‑specific risks, the long‑term trajectory of both companies suggests that now is a favorable time to add them to a well‑balanced portfolio.