Target and retail were just crushed - these stocks may have been oversold
MicroStockHub/iStock via Getty Images

The crushing week in retail saw mall stocks like Ross Stores (ROST) -22%, Boot Barn (BOOT) -18%, Shoe Carnival (SCVL), Abercrombie & Fitch (ANF) -14%, Chico's FAS(CHS) -13%, Burlington Stores (BURL) -13%, Cato Corporation (CATO) -12% and Urban Outfitters (URBN) -12% all suffer big losses.
The declines across specialty retailers were led by Bath & Body Works (BBWI) -24%, Five Below (FIVE) -19%, Conn's (CONN) -18%, Best Buy (BBY) -16% and Williams-Sonoma (WSM) -14%. Analysts are noting that the drops came without regard to the individual revenue, expenses, and pricing power considerations within the group.
Discounters Dollar Tree (DLTR) -20%, Dollar General (DG) -19% and Big Lots (BIG) -18% were also hammered during the week.
Ground zero for the retail collapse was Target (NYSE:TGT), which shed 29% following its earnings and guidance bombshell. The retail giant set off a chain reaction when it warned of "rapid shifts" in consumer demand. Target (TGT) CEO Brian Cornell also said the company is "laser-focused" on protecting its value position in the inflationary environment in a development that means margins could suffer. (Read the Target earnings call transcript).
Meanwhile, Amazon (AMZN) fell only 5% during the week, while Walmart (WMT) shed 19%. While both have significant labor and freight inflation headwinds to contend with, investors see Amazon as positioned better than the Bentonville retail giant if lower-income spending starts to wobble.
The broad selling across retail may have left investors with some value opportunities.
Morgan Stanley points to dollar store stock Dollar General (DG) and Dollar Tree (DLTR) as potentially oversold with international sourcing risk low and freight costs seen as manageable. The firm also thinks the big drops in Costco (COST) and BJ's Wholesale Club (BJ) place them at attractive levels. The club retailers are called defensive plays with the group selling a high mix of consumables and having different buying processes with limited SKU counts. Th sell-off in auto parts stocks Advance Auto Parts (AAP), AutoZone (AZO) and O'Reilly Automotive (ORLY) was also called overdone with the defensive sector known to have pricing power.
On a valuation check, the retail sector shellacking has pushed the forward price-to-earnings ratios on The Children's Place (PLCE), Torrid (CURV), Guess (GES), Victoria's Secret (VSCO), Kirkland's (KIRK), Sally Beauty Holdings (SBH) and Dick's Sporting Goods (DKS) into the single digits, although downward earnings revisions are a risk.
Some of the stocks with the highest Seeking Alpha Quant Rating out of the retail sector include Build-A-Bear Workshop (BBW), AutoNation (AN), J. Jill (JILL) and Ethan Allen International (ETD). See the complete list.
Add your oversold retail stock picks to the comment stream.