U.S. markets open in 1 hour 47 minutes
  • S&P Futures

    4,082.75
    -7.25 (-0.18%)
     
  • Dow Futures

    34,031.00
    -125.00 (-0.37%)
     
  • Nasdaq Futures

    12,163.00
    +11.00 (+0.09%)
     
  • Russell 2000 Futures

    1,936.70
    -2.70 (-0.14%)
     
  • Crude Oil

    79.24
    +0.37 (+0.47%)
     
  • Gold

    1,944.70
    -0.60 (-0.03%)
     
  • Silver

    23.59
    -0.24 (-1.01%)
     
  • EUR/USD

    1.0898
    +0.0032 (+0.29%)
     
  • 10-Yr Bond

    3.5290
    0.0000 (0.00%)
     
  • Vix

    19.53
    -0.41 (-2.06%)
     
  • GBP/USD

    1.2321
    +0.0004 (+0.04%)
     
  • USD/JPY

    129.8080
    -0.2600 (-0.20%)
     
  • BTC-USD

    23,098.62
    +199.38 (+0.87%)
     
  • CMC Crypto 200

    523.36
    +4.56 (+0.88%)
     
  • FTSE 100

    7,787.92
    +16.22 (+0.21%)
     
  • Nikkei 225

    27,346.88
    +19.77 (+0.07%)
     

Holiday Retail Sales on Track for Solid Growth: 4 Picks

Retail sales might not be as unimpressive during the upcoming holiday season as it was expected earlier. According to the National Retail Federation (NRF), retail sales will likely witness a solid jump during the November and December period despite soaring prices. Although it might not topple the record set last year, sales will grow significantly and be higher than the pre-pandemic levels.

Also, e-commerce will play a major role in giving sales a boost during the holiday season, which will pick up during Cyber Week, which runs from Thanksgiving Day through Cyber Monday. Given this scenario, stocks with a strong online presence like Sportsman's Warehouse Holdings, Inc. SPWH, TravelCenters of America Inc. TA, DICK'S Sporting Goods, Inc. DKS and Vivint Smart Home, Inc.VVNT are expected to benefit in the near term.

Holiday Retail Sales to Grow

The retail sector has been suffering as people continue to cut down on their purchases owing to rising costs. However, sales are projected to rebound during the holiday season, like every year. According to the latest report from NRF, retail sales are forecast to jump 6-8% year over year to $942.6-$960.4 billion this holiday season.

This is quite mediocre compared to the 13.5% jump in 2021, when retail sales hit a record high of $889.3 billion during the holiday season. However, a 6-8% jump this year is now being considered healthy growth, given that retail sales have been slowing down drastically owing to rising commodity prices.

Moreover, the growth forecast, if achieved, will be higher than the last 10-year average holiday sales. Holiday sales have averaged a jump of 4.9% over the past 10 years.

The NRF also predicts e-commerce to play a major role in giving holiday sales a boost. Online and other non-store sales are expected to rise 10-12% between $262.8 billion and $267.6 billion, surpassing the $238.9 billion recorded last year.

Last year saw unprecedented growth in e-commerce sales as most people bought things online as they had by that time gotten accustomed to this mode of shopping following the COVID-19 outbreak. The trend is expected to continue this year too, as people have finally realized the benefits and comforts of shopping online.

Retailers Ramp Up Hiring

Inflation has been a major concern this year, and many consumers, according to NRF, are planning to kick off holiday shopping early this year. Also, several retailers have already announced their holiday season deals and an early start to the shopping bonanza.

According to NRF’s annual survey conducted by Prosper Insights & Analytics, 46% of shoppers polled plan to surf and buy before the holiday season starts. The holiday season starts typically on Nov 1 and ends on Dec 31.

However, holiday shoppers still plan to shell out a total of $832.84 billion on gifts and other holiday items such as food and decoration, which is in line with the average of the past 10 years.

Another report from Adobe Analytics also shows e-commerce to play a major role in driving holiday sales this year. According to an Adobe report, online retail sales in the United States are expected to reach $209.7 billion this holiday season, growing 2.5% year over year.

Retailers are also on a hiring spree, and the NRF expects 450,000 and 600,000 season workers to be hired over this two-month period.

Retailers bank heavily on the holiday season as retail sales get a boost from higher demand during this period. Although higher costs remain a concern, shoppers typically spend more during this period on gifts and other holiday items. This year too, is going to be no different. Moreover, NRF's holiday sales projection is in line with its full-year forecast for retail sales, which is projected to rise 6-8% to more than $4.86 trillion in 2022.

Our Choices

Given this scenario, it would be wise to invest in these four stocks with a strong online presence. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sportsman's Warehouse Holdings, Inc. is an outdoor sporting goods retailer. Its stores offer camping products, fishing products, and hunting and shooting products. SPWH’s stores also provide clothing products, footwear products and optics, electronics, and accessories.

Sportsman's Warehouse’s expected earnings growth rate for next year is 25.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. SPWHpresently sports a Zacks Rank #1.

TravelCenters of America Inc. is a full-service national travel center chain in the United States, with nationwide locations serving hundreds of thousands of professional drivers and other highway travelers each month, including virtually all major trucking fleet. TA’s travel centers operate under the TravelCenters of America, TA and Petro brand names and offer diesel and gasoline fueling services, restaurants, heavy truck repair facilities, stores and other services.

TravelCenters of America’s expected earnings growth rate for the current year is 96.6%. The Zacks Consensus Estimate for current-year earnings has improved 6.9% over the past 60 days. TA presently sports a Zacks Rank #1.

DICK'S Sporting Goods, Inc. operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, etc. DKS also owns and operates Golf Galaxy and Field & Stream stores as well as Team Sports HQ. DICK'S Sportingalso operates an all-in-one youth sports digital platform, which offers scheduling, communications and live scorekeeping via the GameChanger mobile apps, free league management services, custom uniforms and fan wear.

DICK'S Sporting’s expected earnings growth rate for next year is 2.8%. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past 60 days. DKS presently has a Zacks Rank #2.

Vivint Smart Home, Inc. is a smart home company primarily in North America. VVNT delivers an integrated smart home system with in-home consultation, professional installation and support delivered by its Smart Home Pros, as well as 24/7 customer care and monitoring.

Vivint Smart Home’s expected earnings growth rate for the current year is 56.1%. Shares of VVNT have gained 9% in the past 30 days. Vivint Smart Home presently has a Zacks Rank #1.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
 
TravelCenters of America LLC (TA) : Free Stock Analysis Report
 
Sportsman's Warehouse Holdings, Inc. (SPWH) : Free Stock Analysis Report
 
Vivint Smart Home, Inc. (VVNT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research