Retailers are overhauling their operations as technology redefines the shopping experience. One initiative that has helped the industry sustain its same-store sales growth is the expansion into e-commerce, and retail stocks have been rewarded as they’ve returned 10.7% over the past six months and beaten the S&P 500 by 6.2 percentage points.

Nevertheless, investors should tread carefully as many companies will light cash on fire by opening new locations without the proper justifications. Keeping that in mind, here is one resilient consumer stock at the top of our shopping list and two we’re steering clear of.

Two consumer retail stocks to sell:

OneWater (ONEW)

Market cap: $161.5 million

A public company since early 2020, OneWater Marine (NASDAQ: ONEW) sells boats, yachts, and other marine products.

Why Should You Sell ONEW?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
3. 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

OneWater’s stock price of $9.69 implies a valuation ratio of 10.9x forward P/E. To fully understand why you should be careful with ONEW, check out our full research report (it’s free).

Bath and Body Works (BBWI)

Market cap: $4.45 billion

Spun off from L Brands in 2020, Bath & Body Works (NYSE: BBWI) is a personal care and home fragrance retailer where consumers can find specialty shower gels, scented candles for the home, and lotions.

Why Do We Think Twice About BBWI?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Estimated sales for the next 12 months are flat and imply a softer demand environment
3. Earnings per share lagged its peers over the last three years as they only grew by 3.8% annually

Bath and Body Works is trading at $22.02 per share, or 9.2x forward P/E. If you’re considering BBWI for your portfolio, see our FREE research report to learn more.

One consumer retail stock to buy:

Five Below (FIVE)

Market cap: $13.28 billion

Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Why Do We Love FIVE?

1. Offensive push to build new stores and attack its untapped market opportunities is backed by its same-store sales growth
2. Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 10.5% over the past two years
3. Operating margin expanded by 6.5 percentage points over the last year as it scaled and became more efficient

At $237.63 per share, Five Below trades at 24.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks we like even more

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.