Thanksgiving to Cyber Monday is going to be an excessively busy shopping season, at stores and online. Retailers are thus poised to see a substantial uptick in sales.
In fact, upbeat economic conditions and a two-decade high consumer confidence are proving conducive for retailers. So, it goes without saying that retail stocks are solid bets for now.
Millions Plan to Shop Over 5-Day Thanksgiving Weekend
Per the annual survey recently released by the National Retail Federation and Prosper Insights & Analytics (NRF), retailers are preparing for one of the most extravagant weekends of the year. An estimated 164 million plan to go shopping this Thanksgiving Day through Cyber Monday.
The NRF survey showed that nearly 21% (34 million) are planning to shop during the Thanksgiving Day, 41% (67 million) are expected to shop on Small Business Saturday and 20% (32 million) will shop on Sunday. The shopping weekend will come to end on Cyber Monday, with almost 46% (75 million) expected to make the most of online bargains. But, it’s Black Friday that will be the busiest with 71% (116 million) expected to splurge.
Majority of consumers said that they are looking forward to advantage from deals and promotions retailers will offer this year, while the rest said that the upcoming holiday season is traditionally the time to shop and they are pretty much willing to indulge.
NRF President and CEO Matthew Shay summed up by saying that “whether it’s heading to the stores after finishing their turkey or going online on Cyber Monday, consumers will be shopping all weekend and retailers will be ready to meet the demand.”
Retailers to End 2018 With a Bang
The NRF has already said that holiday retail sales in November and December — excluding automobiles, gasoline and restaurants — will jump between 4.3% and 4.8% from last year to $717.45-$720.89 billion. The projections, in fact, show an average annual increase of 3.9% over the past five years.
The NRF and Prosper Insights & Analytics reports added that consumers are willing to spend average of $1,007.24 during the upcoming holiday season, up 4.1% from the projection of $967.13 for last year.
Why Consumers Are Willing to Spend More
Matthew Shay rightly said that “thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we've seen over the past year.”
In the last two quarters, the U.S. economy recorded the fastest six-month growth in four years and is on track to hit the Trump administration's annual growth target of 3%. If that happens, it would be the best yearly performance since 2005, two years before the Great Recession.
The U.S. economy got a boost in the third quarter, with GDP increasing at an annualized pace of 3.5%, per the U.S. Commerce Department. In fact, the country’s total output of goods and services followed an even stronger 4.2% growth in the second quarter.
At the same time, consumers in America are currently most confident in almost two decades, courtesy of a healthy labor market. Their assessment of present-day conditions is encouraging, making them confident of continued economic expansion, at least in the near term.
The consumer confidence index climbed to 137.9 last month from 135.3 in September, per the Conference Board, a business research organization.
5 Top Retail Picks for Now
Taking the expected bumper holiday weekend sales into account, retailers are undoubtedly set to witness a strong year-end rally. Hence, it will be prudent to invest in five of the best retail stocks for handsome returns. Such stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Shoe Carnival, Inc. SCVL operates as a family footwear retailer in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for earnings rose 10.2% in the past 60 days. The company’s expected earnings growth rate for the current year is 59.8% compared with the Retail - Apparel and Shoes industry’s projected rise of 11.4%.
Fossil Group, Inc. FOSL designs, develops, markets, and distributes consumer fashion accessories. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for earnings surged 32.1% in the past 60 days. The company’s expected earnings growth rate for the current year is more than 100% compared with the Retail - Apparel and Shoes industry’s estimated increase rise of 11.4%.
Kohl's Corporation KSS operates as an omni-channel retailer in the United States. Its stores and Website offer apparel, footwear, accessories, beauty, and home products. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for earnings increased 0.6% in the past 60 days. The company’s expected earnings growth rate for the current year is 30.8% compared with the Retail - Regional Department Stores industry’s projected rise of 20.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tiffany & Co. TIF designs, manufactures, and retails jewelry and other items in the Americas. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for earnings advanced 0.2% in the past 60 days. The company’s expected earnings growth rate for the current year is 16.7% compared with the Retail - Jewelry industry’s projected rise of 7.9%.
RH RH operates as a retailer in the home furnishings. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for earnings increased 1.3% in the past 60 days. The company’s expected earnings growth rate for the current year is 150.2% compared with the Retail - Home Furnishings industry’s expected growth of 11.1%.
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