Over the years, it was assumed that ultimately brick-and-mortar retail would die and the tidal wave of online purchasing and the Godzilla strength of Amazon.com Inc. (NASDAQ: AMZN) would devour everything in its path. However, a funny thing happened on the way to the future. While Amazon’s growth and strength are undeniable, the top retail stores have continued to adapt and are holding their own, as there is one distinct quirk in apparel and footwear. You can’t try on things on the internet.

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Jefferies noted this in a new report, and the firm is very positive on some of the top consumer retail stocks, especially after very solid holiday sales. The analyst said this when looking at the sector:

The consumer is strong, Amazon is not killing retail, the Fed is more dovish, oil is down, first half weather compares easy, free-cash-flow piling up, margins are moving up and consumer discretionary stocks are cheap on absolute and relative basis. Recent fundamentals suggest consumption has moderated somewhat due to stock market volume and tariff uncertainty, not a late cycle indicator. Thus, we would use the market’s late 2018 air pocket to get long consumer names for 2019.

Jefferies also noted this when talking about Amazon and the company’s retail impact:

We put a lot of effort into our MYTHBUSTERS thesis showing the Street that Amazon wasn’t taking over the world and retailers were catching up in key areas such as delivery and fulfillment which was the most important driver of our bullish group call (and we’re keeping that call for 2019).

We screened the Jefferies top picks in the consumer retail sector and found five that have been hammered but look like solid 2019 picks. All are rated Buy and also pay decent dividends, which adds to the total the return potential.

American Eagle Outfitters

This top retail stock has acted better since bouncing off lows in later December. American Eagle Outfitters Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle Outfitters and Aerie brands.

The company operates more than 1,000 stores in the United States, Canada, Mexico, China, Hong Kong and the United Kingdom, and it ships to 81 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at 119 international stores operated by licensees in 18 countries.

Top Wall Street analysts have highlighted that the company offers among the clothing sector’s best denim execution and on-trend fashion, and those positives could drive traffic upside, as well as be long-term drivers of international, Aerie, digital and omni inventory. Good execution, solid inventory control and the trend for old-school denim fashions are all positives.

American Eagle investors are paid a solid 2.86% dividend. The Jefferies price target for the shares is $28, and the Wall Street consensus target price is $24. The stock closed Friday’s trading at $19.17 a share.

Foot Locker

This athletic shoe retailer has rallied from lows and looks ready to move higher. Foot Locker Inc. (NYSE: FL) is an athletic footwear and apparel retailer in North America, Europe and Asia. The company’s banners include Foot Locker, Champs Sports, FootAction, Kids Foot Locker, Lady Foot Locker, SIX:02 and Eastbay.

Many Wall Street analysts feel that consumers are bearing price increases from the top companies like Nike, Reebok and Adidas. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return on invested capital, which some think will be a source of multiple expansion.

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Foot Locker investors receive a 2.54% dividend. Jefferies has a price target of $62, and the posted consensus target is $58.57. The shares closed trading on Friday at $54.34 apiece.

The Gap

This top retailer could be poised to benefit from continued extra consumer spending, and it is the top pick at Jefferies. Gap Inc. (NYSE: GPS) sells private label merchandise through three main retail concepts: The Gap, Old Navy and Banana Republic, along with smaller growth vehicles Athleta and Intermix. The company also sells its products through its company websites. Most of its international stores are Gap stores, concentrated in Western Europe (France, United Kingdom), Japan, China and Canada. The company has over 3,500 stores worldwide.

The company announced last summer that Neil Fiske would take over the role of president and chief executive of its Gap brand. Fiske previously had been chief executive of Billabong, Eddie Bauer and Bath and Body Works.

Gap shareholders receive a 3.78% dividend. The $50 Jefferies price target is well above the $29.50 consensus figure, as well as the most recent close at $25.66.

Kohl’s

This top retailer has been hit hard but remains a top pick. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States that offer private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices.

While retail chains have suffered from internet pressure, Kohl’s has held its own as consumers see the company as a solid discount retailer. In addition, Amazon is growing its partnership with the department store chain. Last summer, the two companies announced that Kohl’s would begin selling Amazon devices, such as the Echo and Fire tablets, at 10 of its stores. Kohl’s also will be accepting Amazon.com returns at certain U.S. locations.

Investors receive a 3.70% dividend. Jefferies has set its price target at a stunning $110. The consensus price objective was last seen at $76.28, while the stock ended last week trading at $65.89 per share.

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These four top companies all pay dependable dividends and have good upside to their Jefferies price targets. Since earnings are on the way, it may make sense for investors to buy partial positions now and see if there are any pullbacks on the fourth-quarter results.

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