Analysts See Big Upside for These 3 Retail Stocks

Key Points

• These three retail stocks have all the fundamentals in place to deliver double-digit rallies in the coming months, and Wall Street agrees.
• With aggressive EPS beats this quarter, it shouldn't be a surprise to see these names outperform.
• Tariffs haven't had the impact consumers expected, clearing the way for bearish assumptions.

Most retail investors will overlook this detailed breakdown of hot retail stocks for one simple reason. The technology sector has captured all the attention of the stock market today (not to mention a lot of its capital) because it features the most attractive and popular names among investment circles. While that is fine, being late to the party is not.

This is why today’s list is important to keep in mind: investing (and trading to a certain extent) should be a boring activity, as emotions and adrenaline can often sway attention and decision-making in an unfavorable direction.

For this reason, smart investors will dig deeper into this information, considering that it isn’t the mainstream view, especially now that trade tariffs have prompted the “experts” to spread negative headlines about the entire space.

After more than two quarters of tariffs being in place, the United States consumer appears resilient enough to keep pushing retail names into new highs, and their fundamentals certainly call for even higher prices to emerge in the future. This is why names like Urban Outfitters Inc. NASDAQ: URBN, Dutch Bros Inc. NYSE: BROS, and On Holding NYSE: ONON can bring a bright future to any portfolio.

Urban Outfitters: A Recent Analyst Favorite

While Urban Outfitters is by no means the hottest name in American fashion, it does offer its consumer demographic an affordable way to enter some of the latest trends. Its stores are conveniently located across malls, which aren’t as dead as people thought they’d become.

This affordability factor is of utmost importance during a time when nearly everyone is concerned about inflation being persistent, preventing them from shopping at other places that have exercised their right to raise prices. Perhaps this was something Wall Street analysts weren’t accounting for, as the recent quarterly earnings beat shows.

The markets were expecting Urban Outfitters to report earnings per share (EPS) of only $1.44. The company came in with a swift beat of $1.58 (roughly 10% above consensus), and that’s happening even before the potential Federal Reserve rate cuts in September 2025.

Now, while the consensus view remains a Hold, valuing Urban Outfitters at $ 81.80 per share, some analysts have decided that the future is clear enough to offer a new opinion. Lorraine Hutchinson from Bank of America recommends buying the stock, with a target price of $93 per share, implying a 38.8% upside in the coming months.

Dutch Bros Is The Premium Coffee Name Now

When anyone thinks of coffee stocks, it is typically Starbucks Corp. NASDAQ: SBUX that comes to mind. However, that stock is now trading at roughly a “fair” value, considering its 38.0x price-to-earnings (P/E) ratio, which is in line with the retail sector’s average of 34.4x.

On the other hand, Dutch Bros stock commands a massive premium of 153.1x P/E, and the market can’t be this delusional in pricing in such a significant gap for Starbucks’ smaller competitor. Usually, there are very good reasons for these sorts of premiums, though figuring out why can be a bit of a rabbit hole.

Instead, investors can focus on the end results this company (and its expanding footprint) have delivered, such as the 26 cents EPS reported during the latest quarterly earnings results, which blew past the 18 cents EPS consensus by a wide 44.4% margin.

This was enough to maintain the stock as a consensus Buy among Wall Street analysts, who now value the stock at $80 per share, representing 11% upside potential. However, as with Urban Outfitters, some analysts, such as Andrew M. from TD Cowen, see its fair value closer to $86 per share (or 20% above today’s prices).

On Holdings’ Secret Weapon: Wholesale Shift

Management has recently taken a turn regarding On Holdings stock and its future. Rather than remaining in the retail space, the new strategy is to aggressively enter the wholesale operation segment, which may harm the company’s cash flow in the short term.

This might be why it trades at only 70% of its 52-week high, though it represents a great dip-buying opportunity. This opportunity arises from the company’s wholesale operation, contributing to its economies of scale, enabling gross profit margins to reach as high as 60%, an impressive feat for a $14.5 billion company.

Most investors would likely agree with the Wall Street consensus, which assigns a Moderate Buy rating and a $64.2 valuation target, indicating 42.5% upside potential.

Any outliers (which there are some) would provide an added confidence bonus; however, with this consensus alone, investors can recognize that the margin expansion is doing what it’s intended to do.