Shoppers are racing to their favorite retailers this morning but is the crowd thinning? Has Black Friday been overshadowed by Cyber Monday? Online shopping has become the norm in our digitalizing world. The ease and convenience of shopping in your own domicile is an offering that is hard to pass up. According to a WSJ survey, over 40% of shoppers this holiday season will be making their purchases online. Today, Cyber Monday is becoming almost more exciting for shoppers than the Boomer enforced Black Friday doorbusters.
Which stocks will benefit from the evolving holiday shopping season?
The Retail Space
Brick-and-mortar retailers have been getting steamrolled by the e-commerce revolution that has been taking over the space in what people are calling the ‘retail apocalypse.’ Stores are closing by the thousands with a record of 9,300 stores having already closed or expected to in 2019.
There is a few subset of retailers that have been able to outperform the market. Retailers that have been immune to the retail apocalypse are ones that cater to the millennials who find importance in both value and convenience.
Discount retailers like TJ Maxx, Marshall’s (TJX), Ross Stores (ROST), and Target (TGT) have all outperformed the broader market this year due to their value propositions and the thrill that shoppers get when they find that needle in the haystack. I think that these retailers could see some considerable upsides due to the holiday season as foot-traffic and online shopping could boost sales beyond estimate as our economic condition stabilizes.
Lululemon (LULU) is another stock to keep an eye on this holiday season as a growing cohort of loyal customers attempt to grow this following even further. Lulu gifts will be waiting under the tree for those who are yet to convert to the athleisure culture. This fashion epidemic has been running ramped both domestically and abroad.
LULU is expected to grow its topline by robust double-digit percentages while expanding its margins. This company created the athleisure lifestyle and continues to lead the charge as it takes over global fashion.
I expect Cyber Monday to be big this year as more and more shoppers are converted to online customers. Amazon (AMZN) is an obvious candidate to gain from Cyber Monday as it controls roughly half of the US’s online shopping market. AMZN has been trading sideways since August, and this holiday rush could be the springboard this stock needs to jump back into growth.
eBay (EBAY), the US’s second-largest online retailer, could also see a substantial sales boost domestically and internationally with its broad global exposure. This company is trading at 12x P/E and yields investors a 1.6% dividend. EBAY is being valued at the lowest end of its 5-year P/E valuation and believe that this stock could be a good value buy.
Alibaba (BABA) also has much to gain from the holiday season with its control of the Chinese e-commerce market. China’s big “Singles Day” (which is equivalent to our Cyber Monday) occurred earlier this month and demonstrated over $38 billion in sales for Amazon of the East.
Alibaba has achieved wider margins and larger operating profits from online shopping than its domestic competitor Amazon. China is becoming the world’s largest consuming country and Alibaba continues to lead the online shopping charge. I think BABA is a buy today.
US economic concerns have begun to diminish, and I expect that consumer discretionary spending for this holiday season will be active. Unemployment is at a half-century low, and everyone is ready to spread cheer and happiness with their wallets wide open.
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The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
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