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Holiday Sales to Increase This Season: 5 Winners

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The retail sector has been badly hit by the pandemic but the holiday season may come as a savior. Retailers bank heavily on this period for sales to pick up and this year seems to be no different. According to a new report by the National Retail Federation (“NRF”), holiday sales are predicted to witness impressive growth this time.

Moreover, increased reliance on technology has seen more people shopping online during the pandemic. The trend is likely to continue as there is still no concrete sign of a vaccine hitting the markets anytime soon. Hence e-commerce is once again likely to boost holiday sales.

Holiday Sales to Grow This Year

The NAR on Nov 23 said that it expects holiday sales to reach between $755.3 billion and $766.7 billion, suggesting growth of 3.6-5.2% from 2019. Holiday sales have increased an average 3.5% over the past five years. Moreover, online and other non-store sales combined will grow between 20% and 30% to $202.5-$218.4 billion, jumping from $168.7 billion in 2019. 

According to NRF, customers have shown interest in holiday shopping despite the pendemic and are willing to spend on gifts. Although not all retailers and categories have rebounded at a fast pace since the reopening of the economy, aggregate retail sales have been witnessing a V-shaped recovery, growing both month over month and year over year. Per NRF, sales were up 10.6% year over year in October. 

E-Commerce to Boost Holiday Sales

E-commerce has played a major role in saving the retail industry during the pandemic as more people relied on technology for shopping. The trend is likely to continue given that fears of another wave of the pandemic have already gripped millions.

According to NRF, e-commerce sales witnessed year-over-year growth of 36.7% in the third quarter and people in huge numbers will continue to prefer shopping online due to the pandemic. Moreover, the federation expects retailers to hire between 475,000 and 575,000 temporary workers this season compared to 562,000 heads last year.

Our Choices

Although fears of the second wave of coronavirus have gripped the nation, positive news on the vaccine front have also somewhat lifted the morale of both consumers and retailers. Much like the earlier years, people will continue spending during the holiday season albeit keeping in mind the safety concerns. Investors thus hopeful of a fruitful holiday season for retailers should tap the following retail stocks, with a strong online presence.

Target Corporation TGT has evolved from just being 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 35.5%. The Zacks Consensus Estimate for current-year earnings has improved 21.1% over the past 60 days. Target carries a Zacks Rank #2.

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 housewares 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.

Systemax Inc. SYX is a direct marketer of brand name and private label products, including personal desktop computers, notebook computers, computer-related products, and industrial products, in North America and Europe. 

The company’s expected earnings growth rate for next year is 22.3%. The Zacks Consensus Estimate for current-year earnings has improved 26.9% over the past 60 days. Systemaxhas a Zacks Rank #1.  

Hibbett Sports, Inc. HIBB is a major athletic-inspired retailer, located in small and mid-sized markets across the country. The company operates predominantly in the South, Southwest, Mid-Atlantic and Midwest regions of the United States.

The company’s expected earnings growth rate for next year is 86.3%. The company’s shares have gained 69.1% over the past 60 days. Hibbett Sports has a Zacks Rank #1.  

The Kroger Co. KR operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores.

The company’s expected earnings growth rate for the current year is 49.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the past 60 days. Kroger has a Zacks Rank #2.

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Target Corporation (TGT) : Free Stock Analysis Report
 
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