Cars drive past a Walmart store in Washington, DC Nicholas Kamm/AFP via Getty Images

The Covid-19 pandemic played havoc with retailers earlier this year. However the sector’s recent rally reflects investor optimism that improving traffic and store reopenings can continue into 2021, argues Cowen & Co., and that could further support the stocks.

Analyst Oliver Chen writes that stocks in his coverage have rallied about 24% in the past three months, behind upward revisions of earnings estimates.

One of the key themes he thinks will continue to play out is trip consolidation: As people limit their potential exposure to Covid, they’re trying to do more of

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