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E-commerce Boosts Holiday Retail Sales: 4 Solid Picks

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Ritujay Ghosh
·4 min read
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Retail sales have scored big this holiday season, once again proving that people didn’t hesitate to spend despite the pandemic. Thanks to e-commerce, people have been shopping online. This somewhat saved the retail sector from taking a further beating from the pandemic this year.

The jump in retail sales this holiday season was again driven by e-commerce as more people continued to change their shopping habits. The sudden and rapid shift toward online shopping also saw sales declining at brick-and-mortar stores.

Holiday Season Retail Sales Grow

Retail sales jumped 3% during the expanded holiday season from Oct 11 through Dec 24, according to a new report by Mastercard Inc. MA. The pandemic had cast doubts over this year’s holiday sales given that millions are jobless and lacking spending power. Surprisingly, overall retail sales saw a jump despite the massive blow that the sector suffered over the past few months.

However, sales were driven by e-commerce as more people shifted to shopping online. Per the Mastercard report, overall online sales surged 49% from 2019, which shows that more Americans are relying on e-commerce thanks to the pandemic. E-commerce accounted for 19.7% of the overall holiday retail sales, up from 13.4% in 2019.

Home Furnishing Sales Get a Push Online

Furniture and home furnishings saw the strongest growth among all major sectors, up 16.2% from last year. Once again, e-commerce played a major role, growing 31%. Additionally, home improvement sales were up 14.1%, with e-commerce sales growing 79.7%.

However, sales fell at departmental stores, declining 10.2%. Online sales at departmental stores grew 3.3%, reinforcing the importance of omnichannel offerings. Apparel sales, surprisingly dropped this holiday season, declining 19.1% year over year, while electronics and appliances sales were up 6%.

Our Choices

Given that virus fears have once again started escalating in the minds of people, online shopping will continue to be a safe bet for millions over the coming months. This is thus the right opportunity to invest in retail stocks that have a strong online presence.

Target Corporation TGT has evolved from being just a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.

The company’s expected earnings growth rate for the current year is 37.4%. The Zacks Consensus Estimate for current-year earnings has improved 22.3% over the past 60 days. Target carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Overstock.com, Inc. OSTK is primarily an e-commerce service provider. The company sells its broad range of price-competitive products, including furniture, home decor, bedding and bath, and houseware through its www.overstock.com, www.o.co and www.o.biz websites.

The company’s expected earnings growth rate for next year is 1.8%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. Overstock has a Zacks Rank #2.

L Brands, Inc. LB evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products. 

The company’s expected earnings growth rate for next year is 22.2%. The Zacks Consensus Estimate for current-year earnings has improved 81.1% over the past 60 days. L Brands sports a Zacks Rank #1.

DICKS Sporting Goods, Inc. DKS operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment such as for team sports, fitness, camping, fishing, tennis, golf and water sports.

The company’s expected earnings growth rate for the current year is 58%. The Zacks Consensus Estimate for current-year earnings has improved 51.8% over the past 60 days. Dicks Sporting sports a Zacks Rank #1.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.

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Target Corporation (TGT) : Free Stock Analysis Report
 
DICKS Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Overstock.com, Inc. (OSTK) : Free Stock Analysis Report
 
L Brands, Inc. (LB) : Free Stock Analysis Report
 
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