With turkey day around the corner, investors are shopping the Street for Black Friday deals. Black Friday falls on November 29 and is the biggest shopping event of the year for U.S. consumers, seeing bargain price tags being placed on countless items.
That being said, Black Friday is also an important event for investors as it marks the start of the holiday shopping season. As searches using the phrases “reward apps” and “Black Friday deals” are up 200% this year according to a study from Google, it’s no wonder all eyes are on the market.
Taking this into consideration, how can investors find out which names are set to deliver the goods ahead of this shopping extravaganza? We recommend turning to TipRanks. The Stock Screener tool helped us identify 3 must-watch stocks ahead of Black Friday, all of which are Buy-rated.
Ulta Beauty (ULTA)
Ulta is the largest beauty retailer in the U.S., with its 1,213 stores located across the country. While shares have certainly struggled recently, investors are waiting to see if Black Friday can drive a turnaround.
Part of the issue has been the impact of the lack of innovation within the cosmetics segment itself, which accounts for 51% of Ulta’s sales. However, its additions to its makeup offerings could paint a prettier picture. New products including Florence by Mills (Millie Bobby Brown), KKW Beauty by Kim Kardashian West, Pattern by Tracee Ellis Ross, The Ordinary, Sunday Riley and Kylie Skin by Kylie Jenner were all released during the beauty company’s third quarter. This could set the stage for huge fourth quarter sales.
Guggenheim analyst Steven Forbes commented, “The consensus model appears relatively reasonable and results should improve sequentially as we enter the 4Q.” Not to mention Forbes expects Ulta to make several key investments back into the business. “Based on our conversations, these investments will likely be associated with the company's a) e-commerce/digital and b) supply chain initiatives—note, ULTA is currently slated to open a new Fast-Fulfillment Center (FFC) in Jacksonville, FL in 2020,” he explained.
Based on all the above factors and its ability to capitalize on its relationships with vendors, Forbes is keeping Ulta in his shopping cart. Along with his Buy rating, the 5-star analyst set a $300 price target, which implies about 22% upside from current levels. (To watch Forbes’ track record, click here)
The rest of the Street’s take is more varied when it comes to Ulta. 12 Buy ratings and 9 Holds assigned in the last three months add up to a ‘Moderate Buy’ consensus. In addition, its $285 average price target suggests shares could rise 16% in the next twelve months. (See Ulta Beauty stock analysis on TipRanks)
Shopify offers a complete e-commerce platform with everything vendors need to sell online, on social media or in person. Even though a modest sell-off followed strong quarterly results, one analyst says that investors should get their hands on SHOP shares.
Canaccord's David Hynes wrote in a note to clients that this sell-off implies that “the bar is set awfully high for high-valuation stocks this earnings cycle – particularly those will little or no cash profits”. He added, “We like the idea of owning this stock into a Q4 period in which holiday-driven GMV strength provides upside optionality to the model, and long term we continue to believe that SHOP has the makings of a $100B market cap business at some point in the next 6-8 years.”
SHOP has become a stand-out thanks to its ability to execute against its major quarterly initiatives like increasing its international and plus contribution, its fulfillment center build-out as well as its Shopify Capital expansion. On top of this, live merchants reached more than 1 million in September, up from 820,000 at the start of the year. However, it will be important to watch gross payment volume as adoption has slowed over the last year.
Nonetheless, Hynes is staying with the bulls. The five-star analyst kept his bullish call and $385 price target, indicating that shares could surge 23% over the next twelve months. (To watch Hynes’ track record, click here)
Looking at the consensus breakdown, opinions on SHOP are more split. The bulls come in slightly ahead, with 9 Buys compared to 7 Holds received over the previous three months. The upside potential lands at 19% as a result of its $372 average price target. (See Shopify stock analysis on TipRanks)
Foot Locker (FL)
The shoe retailer has faced a degree of skepticism from Wall Street, as questions linger regarding how Foot Locker can compete given the weak mall-based environment. Bearing this in mind, investors want to know where FL stands ahead of the holiday shopping season.
Some analysts are confident that FL can meet its guidance thanks to footwear product launches. There has been additional access to Yeezy products year-over-year as well as impressive holiday lineups from Nike, Adidas, Puma and Vans. Additionally, it has opened new power stores offering immersive capabilities for customers, localized product with exclusive and limited releases, dedicated women’s and kids’ spaces, digital lockers so customers can pick up online orders and connected inventory. Management’s goal is to have over 200 power stores that reflect local communities.
Deutsche Bank analyst Paul Trussell tells investors that FL is still an important destination in the sneaker market. He cites the ability for customers to compare new footwear across a number of brands, mix and match the wardrobe across brands and consult with store employees as giving it the competitive advantage.
“The company sees itself as the main destination for the young male customer and expects the new loyalty program and Power Stores to create locations where consumers will hang out,” he noted. To this end, the four-star analyst reiterated his Buy rating and $58 price target. This means that shares could climb 27% higher in the next twelve months. (To watch Trussell’s track record, click here)
All in all, cautious optimism circles this retail chain, as TipRanks analytics exhibit Foot Locker as a Buy. Out of 13 analysts polled in the last 3 months, 8 are bullish on FL, 4 remain sidelined, and only one is bearish on the stock. With a return potential of nearly 7%, the stock’s consensus stock-price forecast stands at $48.77. (See Foot Locker stock analysis on TipRanks)