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Retailers are overhauling their operations as technology redefines the shopping experience. Still, secular trends are working against their favor as e-commerce continues to take share from brick and mortars. This puts retail stocks in a tough spot, and over the past six months, the industry has pulled back by 1.6%. This drawdown was disappointing since the S&P 500 climbed 8.1%.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one consumer stock poised to generate sustainable market-beating returns and two that may face trouble.

Two Consumer Retail Stocks to Sell:

Torrid (CURV)

Market Cap: $628.5 million

Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE:CURV) is a plus-size women’s apparel and accessories retailer.

Why Are We Out on CURV?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

2. Subscale operations are evident in its revenue base of $1.12 billion, meaning it has fewer distribution channels than its larger rivals

3. Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 19.3% annually

Torrid’s stock price of $6 implies a valuation ratio of 22.7x forward price-to-earnings. To fully understand why you should be careful with CURV, check out our full research report (it’s free) .

Lithia (LAD)

Market Cap: $9.05 billion

With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.

Why Are We Hesitant About LAD?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

2. Gross margin of 16% is below its competitors, leaving less money for marketing and promotions

3. High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Lithia is trading at $345.10 per share, or 9.8x forward price-to-earnings. If you’re considering LAD for your portfolio, see our FREE research report to learn more .

One Consumer Retail Stock to Watch:

Walmart (WMT)

Market Cap: $792.2 billion

Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Why Does WMT Catch Our Eye?

1. Same-store sales growth lends it the confidence to gradually expand its store base so it can reach more customers

2. Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 5.1% over the past two years

3. Massive revenue base of $681 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions