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Add These 5 Retail Stocks to Your Holiday Shopping Cart

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Amid heightened fears of the ongoing pandemic and resultant social distancing, retailers are gearing up for an unprecedented holiday season. To beat the COVID-19 blues, they are looking for an early start to the festive season with an extended promotional period to avoid rush at stores, given the health concerns. Evidently, retailers need to address any logistical or inventory issues and roll out strategies to provide a seamless shopping experience, whether offline or online.

With shift in consumers’ product preferences and growing inclination toward online shopping, retailers need to replenish shelves with in-demand merchandise and ramp up investments in digitization this holiday season to draw customers.

It is quite apparent that retailers need to play dual in-store and online roles. In fact, the companies’ digital businesses have played a key role amid the lockdown. In this respect, the industry players have been directing resources toward digital platforms, accelerating fleet optimization and augmenting supply chain. In fact, companies’ initiatives to expand delivery options — curbside pickup or ship-to-home orders — and contactless payment solutions have been a boon amid the pandemic. Additionally, retailers are investing in renovation, improved checkouts and mobile point-of-sale capabilities to keep stores relevant.

Despite all endeavors, there is a lingering fear about how comfortable consumers will be in terms of purchasing. Well, if consumers choose to tighten purse strings, retailers have to tough it out this shopping season. However, industry experts believe that any measure undertaken by the government to stimulate demand or a breakthrough in COVID-19 vaccine may lift consumer sentiments, and in turn retailing activities.

Daniel Bachman, Deloitte’s U.S. economic forecaster, said, “While high unemployment and economic anxiety will weigh on overall retail sales this holiday season, reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat.” According to a report from CNBC, Deloitte envisions holiday sales between $1.147 trillion and $1.152 trillion, which suggests an increase of 1-1.5% during the November-January period. Meanwhile, e-commerce sales are estimated to improve 25-35% to reach $182-$196 billion, per the consultancy firm.

5 Prominent Picks

All said, here we have shortlisted five stocks on the basis of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation (TGT - Free Report) is worth betting on. The stock has a Zacks Rank #1 and a VGM Score of A. The company has a trailing four-quarter earnings surprise of 37.6%, on average. It has a long-term earnings growth rate of 7.2%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates an improvement of 12.4% and 11.9%, respectively, from the year-ago period.

Investors can count on Walmart Inc. (WMT - Free Report) , the operator of supermarkets, warehouse clubs, cash and carry stores and discount stores. The company has a trailing four-quarter earnings surprise of 9.5%, on average. It has a long-term earnings growth rate of 5.6%. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 5% and 7.1%, respectively, from the year-ago period.

You may invest in Best Buy Co., Inc. (BBY - Free Report) , which has a Zacks Rank #2 and a VGM Score of A. The provider of technology products, services and solutions has a trailing four-quarter earnings surprise of 33.5%, on average. It has a long-term earnings growth rate of 8.5%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates growth of 3.8% and 17.3%, respectively, from the prior-year period.

We also suggest investing in At Home Group Inc. (HOME - Free Report) , which has a long-term earnings growth rate of 42.5%. This operator of home decor superstores has a trailing four-quarter earnings surprise of 12.4%, on average. The stock has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests an improvement of 12.4% and 196.5%, respectively, from the year-ago period.

Domino's Pizza, Inc. (DPZ - Free Report) with a long-term earnings growth rate of 13.9% is also a solid bet. This pizza company has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has a Zacks Rank #2 and a VGM Score of B. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates growth of 12.1% and 33.8%, respectively, from the year-ago period.

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