Retail Sales Signal Upside for These 3 Consumer Stocks

Key Points

• Fundamental data points to three stocks being rewarded with revenue and earnings growth in the coming quarter, for investors to take advantage of. 
• All stocks in this list have been backed by recent analyst boosts and institutional buying.
• Short sellers have lined up with an optimistic view moving forward, as they've covered their short positions.

Most market participants have become so enamored with the charts that they now hold a strong and similar belief. This belief suggests that fundamental analysis is a waste of time or outright worthless, as the data emerging from the economy or industries is readily available to everyone and already factored into the stock market. This sounds remarkably similar to the efficient market hypothesis, and it is one that has been proven wrong time and again.

Investors with serious buying power should focus on the edge real data provides in the market, expanding their portfolios beyond day trading and short-term holds. As of mid-June 2025, the latest set of retail sales data for the United States has been released, and it has clearly identified some winners that could see higher prices as a result within the retail sector.

These names include companies like Dollar Tree Inc. NASDAQ: DLTR, Ulta Beauty Inc. NASDAQ: ULTA, and Bath & Body Works Inc. NYSE: BBWI as potential candidates in a list to ride out the tailwinds formed after what seemed to be a weak retail sales report, allowing investors to align themselves with the outliers and get the odds in their favor this time around.

A Convenience and Inflation Winner: Dollar Tree Stock

Shares of Dollar Tree have been catching up to the rest of the market lately, rallying by as much as 50% over the past quarter alone. Now, this might come as an unusual achievement, considering the significant volatility and uncertainty in the S&P 500 index itself, where the American consumer is no exception to price volatility at the counter either.

With this in mind, perhaps the market is trying to convey a message, one that suggests Dollar Tree as a company has a much brighter future than the charts may indicate. This bright future can be rooted in the fact that miscellaneous retailers saw the biggest expansion in retail sales in a month when the report itself missed expectations and contracted by 0.9%.

That translates to consumers tightening their budgets across the board, except for what matters. What matters today is a budget-friendly alternative to necessities, and that’s where Dollar Tree comes into play, justifying some of the momentum it has demonstrated over the past quarter and then some.

In fact, Matthew Boss from J.P. Morgan Chase decided to weigh in on Dollar Tree's future, assigning a $111 valuation alongside an Overweight rating. From where it trades today, this valuation calls for Dollar Tree to rally by just under 15%, and chances are that the ceiling will be broken as well.

Ulta Stock Is the Safe Play

Most investors will fail to realize this, but the skincare and makeup industry is one of the safest and recession-proof industries, tending to hold up well regardless of the economic climate. This is why Morgan Stanley analyst Simeon Gutman has reiterated his Overweight rating on Ulta stock and set a $550 per share target.

This view would imply Ulta stock still has up to 16% upside to go from where it can be bought today, a rare occasion for a company that already trades at a new 52-week high. The bit of strength in retail sales points to Ulta being one of the likely candidates in this tailwind, and there are other reasons for investors to consider it as well.

Short sellers saw the wave coming, as evidenced by the 14.2% contraction in Ulta stock’s short interest over the past month alone, a clear sign of bearish capitulation that gives those willing to buy Ulta stock another pillar of confidence to lean on moving forward.

In fact, institutional allocators from the First Hawaiian Bank decided to do just that. As of early June 2025, these investors boosted their holdings in Ulta stock by as much as 20.2% to bring their net position to a high of $1.1 million. While this may not be the largest investment, it does align with the sentiment check that potential buyers should want to see.

Most Undervalued Retail Stock? BBWI Catches Wall Street’s Eye

Bath & Body Works reflects the same kind of strength and consistency seen in Ulta, making it a name worth watching for potential buyers.

That may help explain why analysts continue to stand by their $42 price target, which points to a potential upside of 52.2% from current levels.

As the most mispriced stock in this group, BBWI has caught the attention of institutional investors, who poured $675 million into the name in the most recent quarter.

The setup aligns with broader economic data favoring consumer-facing names, and upcoming earnings could reinforce that trend with further gains in revenue and profit growth.