Retail and apparel shares are having a rough year so far as the industry struggles under the Amazon onslaught.
The SPDR S&P Retail ETF has declined 11 percent year to date through Thursday compared to the S&P 500's 10 percent gain.
Online sales and technology that help retailers track customer preferences and fill orders more efficiently are changing the industry as quickly as consumer behavior evolves, analyst Christian Buss wrote in a note to clients Friday. "As a result, recent disruption to apparel industry revenue growth and earnings is far from over."
Buss predicts online shopping's share of the apparel industry's sales will rise to 37 percent in the next 10 years to 15 years from 18 percent today.
"The transformation to a digital demand chain will reward brands and retailers that can successfully cultivate direct and deep relationships with consumers," the analyst wrote.
Here are two outperform-rated stocks recommended by Credit Suisse, along with the firm's current price targets, of companies that can thrive in the rapidly shifting world of retail.
1) Nordstrom (JWN)
Credit Suisse has a $52 price target for Nordstrom shares, which is 16.5 percent higher than Thursday's closing price.
"Our conversations with Nordstrom management suggest that the company has reached the third phase of investment, with the company already having integrated fulfillment centers for both in-store and online and built catalog expertise through its acquisition of HauteLook. We expect this operational advantage to expedite inventory turnover, help leverage SG&A expenses for online channels, and ultimately to drive operating margin expansion for the eCommerce business."
2) Canada Goose (GOOS.TO)
Credit Suisse has a C$33 price target on Canada Goose shares, which is 51 percent higher than Thursday's closing price. An ADR for the company trades in the U.S. on the New York Stock Exchange under the ticker GOOS.
Canada Goose has "an eCommerce-first, direct-to-consumer model that avoids today's retailer malaise … There is an inherent tension in an aggressive growth trajectory: the bigger a brand gets, the less appealing it is to its core consumer. Canada Goose is managing this tension in a way we view as entirely appropriate: tight management of distribution and control of product availability."