Retailers are evolving to meet the expectations of modern, tech-savvy shoppers. 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 14.9% over the past six months and beat the S&P 500 by 4.8 percentage points.

Although these companies have produced results lately, investors must be mindful as many companies in this space face structural headwinds. Keeping that in mind, here is one consumer stock poised to generate sustainable market-beating returns and two we’re passing on.

Two Consumer Retail Stocks to Sell:

Dillard's (DDS)

Market Cap: $10.38 billion

With stores located largely in the Southern and Western US, Dillard’s (NYSE: DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Why Do We Think Twice About DDS?

1. Dearth of new stores suggests management is prioritizing the optimization of its existing locations over growth
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

Dillard’s stock price of $662.94 implies a valuation ratio of 23.1x forward P/E. Dive into our free research report to see why there are better opportunities than DDS.

Penske Automotive Group (PAG)

Market Cap: $10.8 billion

With a diverse global network spanning the US, UK, Canada, Germany, Italy, Japan, and Australia, Penske Automotive Group (NYSE: PAG) operates automotive and commercial truck dealerships across the globe, selling new and used vehicles while providing service, parts, and financing options.

Why Does PAG Give Us Pause?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 16.5% that must be offset through higher volumes
3. Incremental sales over the last three years were much less profitable as its earnings per share fell by 8.8% annually while its revenue grew

At $163.85 per share, Penske Automotive Group trades at 12.1x forward P/E. Read our free research report to see why you should think twice about including PAG in your portfolio.

One Consumer Retail Stock to Watch:

TJX (TJX)

Market Cap: $174.8 billion

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

Why Should TJX Be on Your Watchlist?

1. Same-store sales growth averaged 4% over the past two years, showing it’s bringing new and repeat shoppers into its stores
2. Enormous revenue base of $58.98 billion compensates for its low gross margin and provides significant leverage in supplier negotiations
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it’s making even more lucrative bets

TJX is trading at $157.78 per share, or 31.2x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.