Retail Growth Stocks Show Promise Amid Market Highs

Market indexes are nearing new highs, yet finding reasonably priced growth stocks is a challenge. Retail provides opportunities with Coupang and Skechers standing out as investor favorites, indicating potential for stock price gains.

Date: 23-02-2025

AI Rating: 7

Market Valuation Concerns: The analysis notes that market valuations, particularly the price-to-earnings (P/E) ratio for the S&P 500, are significantly above historical averages, currently sitting at around 30. This suggests that investors are paying more for earnings compared to historical norms, which may raise concerns about the sustainability of current prices.

Coupang (CPNG) Performance: Coupang has demonstrated strong revenue growth, with a 20% increase year over year in Q3 and 25% growth excluding currency changes. The active customer count also rose by 11% year over year, reaching 22.5 million. However, its heavy reliance on the South Korean market poses risks for long-term investors, especially as it attempts to expand internationally. The P/S ratio of 1.6 is appealing for potential growth, suggesting possible upward pressure on its stock price.

Skechers (SKX) Valuation: Skechers is also highlighted with notable growth in revenue and earnings, achieving a 13% sales increase and a 26% rise in earnings year over year in Q4. Despite growing at an annualized rate of 14% over the last decade, the stock trades at a relatively low P/E ratio of 16. This undervaluation could imply potential for stock price appreciation as it gains recognition and trust among investors, although recent concerns over U.S. tariffs on imports from China might temporarily affect its earnings.

Future Potential: The report suggests that both Coupang and Skechers have strong potential for future growth. Coupang's innovations in delivery and customer growth could translate into better stock performance, while Skechers' expansion into performance footwear and efforts to navigate tariffs also indicate resilience and opportunities for value creation.

Stocks: CPNG SKX