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Black Friday a Prelude to Christmas Sales: 5 Winners

Within the first hour of Thanksgiving shopping, online retail sales crossed $2 billion. Despite increased online purchases by Americans, sales at brick-and-mortar stores showed no signs of a slowdown.

In fact, a new trend of in-store pickups boosted sales at retail stores, thanks to the growing integration of physical outlets with online operations. Additionally, record-high sales over the holiday weekend shows that National Retail Federation’s (NRF) strong forecast is quite achievable.

Holiday Weekend Sales Performance

A report from Adobe Analytics shows that Black Friday online sales in the United States totaled $7.5 billion, reflecting 20.5% growth year over year. The figure may lag 2018’s record Cyber Monday sales of $7.9 billion but is still the second-largest online shopping day in America.

Meanwhile, brick-and-mortar stores saw a 4.2% year-over-year increase in Black Friday sales this year, per SpendTrend data by Fiserv. Per the report, consumers have splurged on electronics and appliances, sporting goods, and clothing or shoes. The report states that growth in new payment methods pushed mobile wallet spending by 82%, while 57% customers preferred credit card over debit.

Adobe Analytic, which monitors online transactions of 80 of the top 100 online retailers in the United States, reports $4.2 billion in online sales on Thanksgiving. This marks a record high and a 14.5% jump from last year. Thanksgiving revenues were majorly driven by smartphone sales, which rose 24.4% from 2018.

E-commerce giants like Amazon.com, Inc. AMZN saw more than 100% growth in sales compared to last year, while small scale retailers reported a 61% hike. However, retailers (especially brick-and-mortar) invested in e-commerce offerings and integrated them with traditional stores, providing customers with a new way to shop.

This trend has attracted around 40% customers who purchase online and pick the goods up at stores or curbside, per the Adobe survey. Retailers like Target Corporation TGT, Walmart Inc. WMT and Costco Wholesale Corporation COST, which have been implementing the pick-at-store facility, reported higher online sales than Amazon during the first two weeks of November.

Meanwhile, Adobe expects this trend to pick up as the holidays approach and the Christmas season might see about 61% of online shoppers opting for in-store pickups. Despite rising fears from the protracted U.S.-China trade war, 2.9% growth in consumer spending in the third quarter and historic-high consumer confidence are raising hopes for retailers. Meanwhile, retailers are looking to make the most of a shortened holiday season (six less days between Thanksgiving and Christmas this year) by offering deep discounts.

Considering the NRF’s strong forecast for holiday retail sales, which are expected to rise between 3.8% and 4.2% from the previous year, and Black Friday’s record-breaking sales, it seems that the retail space is poised for bumper holidays.

5 Winners

Both online retailers and brick-and-mortar stores have shown an upward trend during the holiday weekend. Given the encouraging scenario, investors can expect consumer spending to break records this Christmas. So, invest in these five retail stocks that have performed well through the holiday weekend and are poised to grow further.

These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Target is a general merchandise retailer that offers beauty and household essentials, food assortments, apparel, accessories, home décor products, electronics, toys, seasonal offerings and other merchandise. The company’s expected earnings growth rate for the current year is 18.4% compared with the industry’s expected earnings growth of 9.2%. The Zacks Consensus Estimate for the company’s current-year earnings has risen 3.7% over the past 60 days.

Target, a Zacks Rank #1 company, has outperformed the Retail - Discount Stores industry in the past year (+72.8% versus +34.3%). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Boot Barn Holdings, Inc. BOOT is a lifestyle retail chain that offers western and work-related footwear, apparel, and accessories for men, women, and kids. The company’s expected earnings growth rate for the current quarter is 15.2% versus the industry’s estimated earnings decline of 37.7%. The Zacks Consensus Estimate for the company’s current-year earnings has moved up 6.7% over the past 60 days.

Boot Barn, a Zacks Rank #1 company, has outperformed the Retail - Apparel and Shoes industry in a year’s time (+64.5% versus -35.9%).

 

Casey's General Stores, Inc. CASY offers a selection of food, beverages, tobacco, and nicotine products; health and beauty aids; automotive products; and other non-food items. The company’s expected earnings growth rate for the current quarter is 17.8% compared with the industry’s estimated earnings growth of 9.7%.The Zacks Consensus Estimate for the company’s current-year earnings has moved 1.1% north over the past 60 days.

Casey's, a Zacks Rank #1 company, has outperformed the Retail - Convenience Stores industry in the past year (+32.9% versus +29.3%).

 

Best Buy Co., Inc. BBY operates as a retailer of technology products, services, and solutions in the United States, Canada and Mexico. The company’s expected earnings growth rate for the current year is 11.3% against the industry’s estimated earnings decline of 3.4%. The Zacks Consensus Estimate for the company’s current-year earnings has climbed nearly 3% over the past 60 days.

Best Buy, a Zacks Rank #2 company, has outperformed the Retail - Consumer Electronics industry in the past year (+20.4% versus +15%).

 

Costco offers branded and private-label products in a range of merchandise categories. The company’s expected earnings growth rate for the current year is 4.5%. The Zacks Consensus Estimate for current-year earnings has moved up 0.6% over the past 60 days.

Costco, a Zacks Rank #2 company, has outperformed the Retail - Discount Storesindustry year to date (+47.2% versus +45.3%).

 

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