Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Specialty Retail industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Specialty Retail Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Specialty Retail Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Specialty Retail industry for Wednesday, November 13, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Specialty Retail industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

J.Jill, Inc.’s Value Grade

Value Grade:

J.Jill, Inc. operates as an omnichannel retailer for women’s apparel under the J.Jill brand in the United States. It offers apparel, footwear, and accessories, including scarves and jewelry. The company markets its products through retail stores, website, and catalogs. J.Jill, Inc. was founded in 1959 and is headquartered in Quincy, Massachusetts.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

J.Jill, Inc. has a Value Score of 68, which is considered to be undervalued.

When you look at J.Jill, Inc.’s price-to-sales ratio at 0.63 compared to the industry median at 0.40, this company has a higher price relative to revenue compared to its peers. This could make J.Jill, Inc.’s stock less attractive for value investors.

J.Jill, Inc.’s price-earnings ratio is 9.40 compared to the industry median at 18.70. This means it has a lower share price relative to earnings compared to its peers. This could make J.Jill, Inc. more attractive for value investors.

Now, let’s assess J.Jill, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 5.4, when compared to the industry median of 13.6, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. J.Jill, Inc.’s shareholder yield is lower than its industry median ratio of 0.00%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. J.Jill, Inc.’s price-to-book ratio is higher than its industry median ratio of 1.57. This could make J.Jill, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at J.Jill, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. J.Jill, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 23.80. This could make J.Jill, Inc. more attractive because the lower P/FCF ratio indicates that J.Jill, Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Lands' End, Inc.’s Value Grade

Value Grade:

Lands' End, Inc. operates as a digital retailer of apparel, swimwear, outerwear, accessories, footwear, home products, and uniform in the United States, Europe, Asia, and internationally. It operates through U.S. eCommerce, International, Outfitters, Third Party, and Retail segments. The company also sells uniform and logo apparel. It sells its products through e-commerce and company operated stores, as well as through third party distribution channels under the Lands’ End, Lands’ End Lighthouse, Squall, Tugless Tank, Drifter, Outrigger, and Marinac, Beach Living brands, as well as Supima, No-Gape, Starfish, Little Black Suit, Iron Knees, Hyde Park, Year’ Rounder, ClassMate, Willis & Geiger, and ThermaCheck brands. Lands’ End, Inc. was founded in 1963 and is headquartered in Dodgeville, Wisconsin.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Lands' End, Inc. has a Value Score of 81, which is considered to be undervalued.

Lands' End, Inc.’s price-to-book ratio is lower than its peers. This could make Lands' End, Inc. more attractive for value investors when compared to the industry median at 1.57.

You can read more about Lands' End, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Penske Automotive Group, Inc.’s Value Grade

Value Grade:

Penske Automotive Group, Inc., a diversified transportation services company, operates automotive and commercial truck dealerships worldwide. The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It operates dealerships under franchise agreements with various automotive manufacturers and distributors. The company is also involved in the sale of new and used motor vehicles, maintenance and repair services, sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, collision repair services, and wholesale of parts. In addition, it operates a heavy and medium duty truck dealership, which offers Freightliner and Western Star branded trucks, as well as offers a range of used trucks. Further, it imports and distributes Western Star heavy-duty trucks, MAN heavy and medium duty trucks and buses, and Dennis Eagle refuse collection vehicles with associated parts. Additionally, the company distributes diesel and gas engines, and power systems. Penske Automotive Group, Inc. was incorporated in 1990 and is headquartered in Bloomfield Hills, Michigan. Penske Automotive Group, Inc. is a subsidiary of Penske Corporation, Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Penske Automotive Group, Inc. has a Value Score of 69, which is considered to be undervalued.

Penske Automotive Group, Inc.’s price-earnings ratio is 12.4 compared to the industry median at 18.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Penske Automotive Group, Inc. more attractive for value investors.

Penske Automotive Group, Inc.’s price-to-book ratio is lower than its peers. This could make Penske Automotive Group, Inc. more attractive for value investors when compared to the industry median at 1.57.

You can read more about Penske Automotive Group, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Shoe Carnival, Inc.’s Value Grade

Value Grade:

Shoe Carnival, Inc., together with its subsidiaries, operates as a family footwear retailer in the United States. The company offers range of dress, casual, work, and athletic shoes, as well as sandals and boots for men, women, and children; and various accessories. The company also operates stores, and sells its products through online shopping at shoecarnival.com, as well as through mobile app. Shoe Carnival, Inc. was founded in 1978 and is headquartered in Evansville, Indiana.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Shoe Carnival, Inc. has a Value Score of 75, which is considered to be undervalued.

Shoe Carnival, Inc.’s price-earnings ratio is 13.6 compared to the industry median at 18.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Shoe Carnival, Inc. more attractive for value investors.

Shoe Carnival, Inc.’s price-to-book ratio is lower than its peers. This could make Shoe Carnival, Inc. more attractive for value investors when compared to the industry median at 1.57.

You can read more about Shoe Carnival, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

The Container Store Group, Inc.’s Value Grade

Value Grade:

The Container Store Group, Inc. operates as a specialty retailer of organizing solutions, custom spaces, and in-home organizing services in the United States. The company operates in two segments, The Container Store and Elfa. Its stores provide custom space offerings; countertop, cosmetic and jewelry, shower and bathtub, drawer organizers, and cabinet storage products; closets that includes shoe storage, hangers, drawer organizers, boxes and bins, hanging storage bags, garment racks, jewelry storage, and bedding. The company also offers gift packaging products; wall mounted, adhesive, magnetic, overdoor, command hooks, wall mounted shelves, and floor protection hooks; and canisters, jars, lunchtime essentials, bulk food storage, plastic and glass food storage, drawer liners and organizers, countertop organizers, dish drying racks, pantry organizers, kitchen gadgets, China storage products, cookware, glassware, and bar organization. In addition, it provides step stools, hampers, laundry bags and baskets, clothes drying racks, and cleaning tools; desktop collections, paper storage, file carts and cabinets, literature organizers, message boards, media storage, photo storage, display, small craft and parts organizers, and desk chairs; and free-standing and wall mounted shelving, cube systems, component shelving, desks, chairs, and garages. Further, the company offers drawers, totes, crates, carts, toy storage, archival storage, storage bags, specialty bins, boxes, cubes, and home fragrance and environment; kitchen step-on and sensor cans, recycle bins, composting, wastebaskets, open cans, and trash bags; and luggage, clothing organizers, cosmetic and jewelry organizers, travel bottles, and travel accessories. It sells its products directly to customers through its website, responsive mobile site, app, and call center, as well as to various retailers and distributors on wholesale basis. The company was founded in 1978 and is headquartered in Coppell, Texas.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

The Container Store Group, Inc. has a Value Score of 72, which is considered to be undervalued.

The Container Store Group, Inc.’s price-to-book ratio is higher than its peers. This could make The Container Store Group, Inc. less attractive for value investors when compared to the industry median at 1.57.

You can read more about The Container Store Group, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Specialty Retail Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Specialty Retail stocks as well as other industrys.

Choosing Which of the 5 Best Specialty Retail Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• J.Jill, Inc. stock has a Value Grade of B.
• Lands' End, Inc. stock has a Value Grade of A.
• Penske Automotive Group, Inc. stock has a Value Grade of B.
• Shoe Carnival, Inc. stock has a Value Grade of B.
• The Container Store Group, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Specialty Retail industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Specialty Retail Stocks

Want to learn more about Specialty Retail stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Specialty Retail Stocks for Wednesday, November 13
• 5 Undervalued Specialty Retail Stocks for Tuesday, November 12
• 6 Undervalued Specialty Retail Stocks for Monday, November 11
• 7 Undervalued Specialty Retail Stocks for Friday, November 08

AAII Disclaimer

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