"We like these three stocks given the strong underlying consumer, not easily replicable product assortments, digital investments and innovation," notes Cowen analyst Oliver Chen.
The confidence on Target is based off valuation and management's strong execution, while Kohl's is seen benefiting from "retail dislocation" due to its best-in-class loyalty program. Ulta Beauty stands out in the competitive beauty space due in to part to its unique "mass-tige" assortment and superior vendor relationships.
Valuation check: Target and Kohl's trade with forward price-to-earnings ratios below 6X, while Ulta checks in with a forward PE of 11X.
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