Price action is starting to favor some retail stocks, but not all of them are created equal. Academy Sports and Outdoors Inc. (NASDAQ: ASO) is a discount you can score today. Even after rallying by as much as 74% in the past two quarters, it still trades at a 50% discount to the leisure and recreation products industry.  

The leisure and recreation products industry, which includes companies like Academy Sports,  Dick’s Sporting Goods Inc. (NYSE: DKS) and Yeti Holdings Inc. (NYSE: YETI), trades at an average forward P/E of 16.5x today. This valuation benchmark can help you spot the value opportunities, but that’s not all. According to the CME FedWatch Tool, the Federal Reserve could cut rates as early as May of this year. This would signal the beginning of a new cycle for consumer discretionary stocks and increase spending power for the American consumer — an economic boost that could reverse the discount on stocks like Academy Sports. This is why Wall Street has its eyes on the stock now before the opportunity disappears.

Enough Momentum to Beat the Sector and the Market?

Over the past 12 months, the consumer discretionary sector and the broader S&P 500 index performed in lockstep. Academy Sports stock underperformed both by 12% during this period, opening a reasonable discount factor for those who know where to look.

Zooming into the 6-month mark, you will notice that Academy Sports stock actually outperformed both the sector and the market by nearly 30%.

Counting on the momentum of the past two quarters continuing, The Goldman Sachs Group Inc. (NYSE: GS) bought as much as $13 million in Academy Sports stock - a 20.6% increase in its already sizable position.

Half the Price, Twice the Growth as Dick’s Sporting Goods

A discounted stock does not automatically mean it’s a good investment opportunity. After all, a stock could be cheap for a reason not yet known by the broader market. This is why you should look for at least above-average growth in earnings per share (EPS).

Comparing Academy Sports to its closest peer, Dick’s Sporting Goods, you see a gap forming for a value play. EPS growth of 4% makes Dick’s Sporting Goods a blip in the radar for Academy Sports’ 8% projection. While both trade at a discount to the industry, here’s why Academy Sports takes the cake.

Despite being set to grow at twice the rate of Dick’s Sporting Goods, Academy Sports stock still trades at a discount — not only to Dick’s Sporting Goods but to the industry. Its 8.3x forward P/E places it 50% below the industry average and 46% below Dick’s Sporting Goods 16x forward P/E valuation.

Not only that but Dick’s Sporting Goods Director, Lawrence J. Schorr, got rid of $455,000 worth of his stock in the company. This news, along with the difference in company valuations and EPS growth, may have supported Goldman Sach’s decision to invest in Academy Sports stock instead of Dick’s Sporting Goods. Analysts Know This is a Money Maker 

Analysts at Wells Fargo & Co. (NYSE: WFC) boosted their price targets on Academy Sports stock up to $88 a share. The stock would need to rally by as much as 25% to prove these valuations right, which is good for a retailer.

At only $4 billion market capitalization, Academy Sports is half the size of Dick’s Sporting Goods. But the company's financials show it stands out in one significant way: an impressive average return on equity (ROE) rate of 35%. This means each dollar you invest will grow by that much over the long term.

Despite trading at a discount to Dick’s Sporting Goods, Academy Sports is expected to grow its EPS at twice the rate of its main competitor. But both companies are matched in price action. Dick’s Sporting Goods stock trades at 95% of its 52-week high and Academy Sports at 94%, which tells you something.

It is possible that Dick’s Sporting Goods future growth could already be priced into the today’s stock value, limiting its upside. =. On the other hand, its probably that Academy Sports’ potential is still unrealized. If it were, the company’s forward P/E would be much different than it is today.

Academy Sports’ recent buyback of nearly $307 million suggests the stock is cheap right now. And with the company’s next quarterly earnings announcement coming up on March 21, it’s possible management could surprise shareholders with an even bigger buyback program.