Nike, Walmart, and Levi Strauss are among BTIG's top picks in the retail sector

[Emerging Financial Data - Stock Market, Prosperity, Bull Market - Blue Version]
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BTIG launched coverage on a large number of stocks in the retail sector on Wednesday.

Overall, analyst Robert Drbul believes the U.S. consumer is resilient but pointed to some crosscurrents, emerging headwinds, and mixed signals. While concerns around risks to lower- and middle-income consumers were noted, Drbul also highlighted the stability in U.S. gasoline prices, which are down 2.5% over the last year. However, it was also observed that home heating oil prices are up 6%, and natural gas prices are up 15% over the last year.

Drbul and his team believe that retail industry inventory levels are in a strong position and that the supply vs. demand equation is very much in balance, with industry inventory levels up 3.2% coming out of Q2, which is below sales growth of 4.6% for the quarter.

BTIG estimates that holiday sales will be 3.0% to 3.5% above last year's level but reminds investors that there is much more macroeconomic uncertainty, especially with the tariff overhang.

Looking to 2026, Nike (NYSE:NKE [https://seekingalpha.com/symbol/NKE]) is BTIG's favorite idea. "We believe fundamentals will continue to improve over the next year. While the stock has bounced from the lows, we would note that the stock is still down YTD (8%), (-22%) over the last 12 months and well below all-time highs," read the assessment.

Other winners that are at or near highs and positioned to continue performing well were listed to be Walmart (NYSE:WMT [https://seekingalpha.com/symbol/WMT]), Ralph Lauren (RL [https://seekingalpha.com/symbol/RL]), Tapestry (TPR [https://seekingalpha.com/symbol/TPR]), TJX Companies (TJX [https://seekingalpha.com/symbol/TJX]), and Levi Strauss (NYSE:LEVI [https://seekingalpha.com/symbol/LEVI]). All five of those stocks were initiated with a Buy rating.

In terms of playing a little defense, BMO Capital sees buying opportunities with two defensive names (that are near 52-week lows) that have underperformed over the last 3 months, notably Costco Wholesale Corp. (COST [https://seekingalpha.com/symbol/COST]) and BJ's Wholesale Club (BJ [https://seekingalpha.com/symbol/BJ]). The firm also sees opportunities in names that are not well-liked by the Street, including Columbia Sportswear (COLM [https://seekingalpha.com/symbol/COLM]), FIGS (FIGS, G-III Apparel (GII [https://seekingalpha.com/symbol/GII]), Capri Holdings (CPRI [https://seekingalpha.com/symbol/CPRI]), and Gap (GAP [https://seekingalpha.com/symbol/GAP]). Those underappreciated names were also tagged with a Buy rating in the initial ratings look from BTIG.

MORE ON THE RETAIL SECTOR

* Walmart: An Actual Defensive Buy During Weak Economic Conditions [https://seekingalpha.com/article/4829163-walmart-an-actual-defensive-buy-during-weak-economic-conditions]
* Levi Strauss Is Even More Fully Priced Than Before, Too Much Risk Ahead [https://seekingalpha.com/article/4829145-levi-strauss-is-even-more-fully-priced-than-before-too-much-risk-ahead]
* Levi Strauss: Despite A Strong Showing, It's Time For A Downgrade [https://seekingalpha.com/article/4828997-levi-strauss-stock-despite-strong-earnings-time-for-downgrade]
* AI in retail: Analysts react to Walmart's ChatGPT moment [https://seekingalpha.com/news/4503962-ai-in-retail-analysts-react-to-walmarts-chatgpt-moment]
* Market Voices: Dimon on lax lending, Walmart-OpenAI, Bessent on China [https://seekingalpha.com/news/4503983-market-voices-dimon-on-lax-lending-walmart-openai-bessent-on-china]