By Doug Busch
While luxury retail stocks often show resilience thanks to higher-income consumers, real concerns about the economy tend to surface when discount retailers falter -- a signal that even budget-conscious shoppers are pulling back.
But thankfully, that's not what we are seeing today, even with surging oil prices and a softening labor market. Shares of discount leaders like Five Below, Walmart, and Ross Stores continue to hold up well, suggesting that consumer demand at the value end remains intact, a constructive sign for the broader economy.
Importantly, these three retailers aren't just defensive plays during softer economic periods, they've also proven capable of thriving in stronger environments. Their value-focused models, broad customer reach, and ability to capture both so-called "trade-down" and discretionary spending give them a unique flexibility, allowing them to perform across a wide range of economic conditions.
Walmart, Ross Stores, and Five Below stock have a lot going for them on a technical basis, too.
Walmart, a retail play with a nearly $1 billion dollar market value, has performed very well over the past year. The stock has gained 40% in that span, significantly outpacing the 3% gain of the State Street Consumer Staples Select Sector SPDR exchange-traded fund. It has been a remarkably consistent performer: It hasn't has not recorded a losing streak of more than two weeks since the end of 2024.
Looking at its daily chart, the stock lost its 50-day simple moving average in a shallow manner -- similar to what happened last November -- before quickly reclaiming it three weeks later. Thursday, the stock recorded a bullish hammer as it retested a bull flag breakout from the end of January. Notice this stock has performed better than the overall market, as seen by its uptrend against the S&P 500. One can enter here and add to the position through a double bottom pivot of $127.29, looking for the stock to travel towards $150 in the second half of 2026, which would be a gain of 25% from current prices. Remain bullish above $115.
Walmart was trading around $120 Friday.
Ross Stores, an off-price retailer leader, is trading just 3% off its most recent all-time high. One would have to go back nine months to witness the last time this stock fell in consecutive weeks. Since that time, it has fallen on a weekly basis just five times, with the worst weekly loss coming in at 3.2%.
Looking at its daily chart, Ross stock has been a leader. Over the past six months, it has never given up its 21-day exponential moving average, a key momentum gauge. Volume trends have been bullish especially around earnings reactions, the last two of which -- on Nov. 21, 2025 and March 4, 2026 -- saw the stock jump more than 8%. After November's earnings report, the stock ground higher by 24% over the next three months. It has now set up a bull flag pattern. One can enter here, around $209, and look for a move toward $245 in the second half which would be a 17% gain from current prices. Remain bullish above $198.
Five Below, a value-focused specialty retailer, is up more than 200% over the past 12 months and off to a solid start in 2026, up 25%. Since last year's lows around the "Liberation Day" tariff announcements, Five Below stock has surged a stunning 350%. It is 2% off its all-time high made in August 2021, and has advanced 11 months in a row following a monthly doji last April.
Looking closer at its monthly chart, one can see the nice recovery the stock has made against the S&P 500 going back to last April. It sprinted off a double bottom near the $50 mark in April 2025, the level where it had floored out in March 2020, near the Covid-era lows. That very round $50 level was also the area of a bullish inverse head and shoulders breakout seen in September 2017.
Respect how the stock ignored the doji candle this January and is now just above a double bottom pivot of $216.28, in a base that began in August 2021. The stock's powerful comeback since then has been especially impressive, particularly when you consider that the bearish engulfing candle in September 2021 started a 50% drawdown over the next nine months.
I think one can enter at $225 and look for a move toward $300 by the second half of this year, for a 30% gain from current prices. Remain bullish above $210.
Five Below was trading around $228 Friday.
If discount leaders like Five Below, Walmart, and Ross Stores continue to show resilience, it suggests the consumer backdrop remains stable, and that recession fears, for now, might be overstated.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 20, 2026 14:39 ET (18:39 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
