With Best Buy a ‘top idea’ at Piper Sandler, two traders share their three favorite retailers
Piper Sandler is betting big on Best Buy.
Analysts at the firm called the stock "one of our top ideas," saying its new membership program could be a game changer. The firm has an overweight rating and $150 target on Best Buy.
But, it's not the only retailer catching Wall Street's eye. CNBC's "Trading Nation" on Monday asked its traders which name in the space they see as a buy here.
Ari Wald, head of technical analysis at Oppenheimer, said home improvement retailer Lowe's ticks all the boxes.
"It is what we call hitting the 'Opco Trifecta.' It's got a bullish trend behind it, it's rated outperform by our fundamental analysts and there are portfolio tail winds supporting the stock as well based on our view of relative strength coming into the consumer cyclicals segment of the market," Wald said Monday.
"The stock has run up and is testing its May peak, marking resistance at $215. We expect a breakout. We recommend buying it ahead of the breakout in anticipation for it given the underlying trend. In the meantime, there's support at $200, marking its 50-day average," he said.
Lowe's shares have risen more than 8% this quarter, better than the S&P 500 and rival Home Depot.
Eva Ados, chief investment strategist at ERShares, pinpointed furniture chain RH and handmade and crafts e-commerce store Etsy as her two favorites.
"In a market where retail companies have shown artificial, if I may call it, growth over the last year – year-over-year comparisons – these two companies actually had good growth last year," Ados said during the same interview. "Their growth now of 91% for Etsy and 38% for RH is a sustainable growth. It shows a signal that these companies can continue growing."
Strong sales growth couples with healthy profit to make a winning combination for Ados.
"Etsy has a 22.5% income margin and that's 20 times higher than the industry average of 1.5% which is extraordinary. And then in the case of RH, the EBIDTA has doubled in the last three years," she said.
Etsy and RH have had a mixed quarter – Etsy has beat the S&P 500, while RH has traded roughly in line with the benchmark index.
Disclosure: ERShares holds RH and ETSY.