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4 Solid Stocks to Buy on Surging E-Commerce Sales

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The holiday season began just at a time when inflation started showing signs of easing. As prices cooled, more people shopped freely, giving holiday sales the much-required boost. E-commerce once again played a key role in driving sales.

According to the latest data released by Adobe Analytics, e-commerce sales hit a record high this holiday season. E-commerce has been playing a key role in driving retail sales for quite some time now and is poised to play a major role in the future too. Given this scenario, stocks with a strong online presence, Casey's General Stores, Inc. (CASY - Free Report) , Arhaus, Inc. (ARHS - Free Report) , Capri Holdings Limited (CPRI - Free Report) and Build-A-Bear Workshop (BBW - Free Report) are expected to benefit in the near term.

E-Commerce Holiday Sales Grow

According to data from Adobe Analytics, consumers spent a staggering $211.7 billion on online purchases between Nov 1 and Dec 31, up 3.5% on a year-over-year basis. This is also a new record for e-commerce sales.

Cyber week, which comprises the five days between Thanksgiving and Cyber Monday, recorded $35.3 billion in online sales, up 4% year over year. Although these five days generated maximum online sales, consumers made purchases almost throughout the holiday period, with e-commerce sales surpassing $3 billion daily for 38 days, the same as in 2021. In 2020, online sales had crossed $3 billion daily for 25 days.

Demand for toys was high this holiday season, which saw sales surging 206% from the pre-season levels in October 2022. Video game sales soared 115%, while clothing and accessories sales jumped 94%.

Sales of watches were up 108%, baby toys grew 101%, while gift cards and cosmetics increased by 98% and 90%, respectively. Smart home items also climbed 67%, among the other subcategories.

One of the major reasons behind the robust sales was the impressive deals during this holiday season compared to 2021. There were huge discounts on toys, electronics, computers, apparel, appliances and televisions.

Given that rising prices have been a concern, many retailers came up with lucrative offers like buy-now-pay-later schemes. Orders rose 4% in this category. Also, of total online sales, mobiles accounted for  47%. Christmas day set a new record, with 61% of total online sales coming from mobiles, up from 58% in 2021.

Easing Inflation to Boost Sales

The reports came as data showed that inflation eased in November and December. This has been lifting consumer confidence and sentiment as they believe inflation has peaked and is finally slowing down, which has encouraged them to spend more freely.

The consumer price index (CPI) in December dropped to 6.5% from 7.1% in November 2022 on a year-over-year basis, according to data released last week by the Labor Department.

This has been the smallest rise in more than a year. Inflation decreased 0.1% month over month in December after increasing 0.1% in November.

Core CPI, which does not include volatile energy and food costs, increased by 5.7% in December, after jumping 6% in November. On a month-over-month, core CPI climbed by 0.3% in December after rising by 0.2% in November.

After four consecutive interest rate hikes of 75 basis points, the Fed finally slowed its pace of interest rate hikes with an increase of 50 basis points in December. A smaller increase in interest rates indicates that inflation has finally begun to slow down.

Since the beginning of the pandemic, e-commerce has been significantly boosting retail sales. People were forced to shop online during the pandemic in order to maintain social distancing. Since then, the trend has persisted as more people have come to appreciate the convenience and comfort of online shopping.

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.

Casey's General Stores, Inc. operates convenience stores under the Casey's and Casey's General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. CASY also operates two stores under the name "Tobacco City," primarily selling tobacco and nicotine products, one liquor store, and one grocery store.

Casey's General Stores’ expected earnings growth rate for the current year is 18.4%. The Zacks Consensus Estimate for current-year earnings has improved 7.5% over the past 60 days. CASY currently has a Zacks Rank #2.

Arhaus, Inc. is a lifestyle brand and omni-channel retailer of premium home furnishings. ARHS offers an assortment of heirloom quality products. Arhaus Inc. is based in Boston Heights, OH.

Arhaus Inc.’s expected earnings growth rate for the current year is 24.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the past 60 days. ARHS presently sports a Zacks Rank #1.

Capri Holdings Limited provides women’s and men’s accessories, footwear and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. CPRI operates in the global personal luxury goods industry, which has been severely impacted by the outbreak of coronavirus.

Capri Holdings Limited’sexpected earnings growth rate for the current year is 10.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. CPRI presently carries a Zacks Rank #2.

Build-A-Bear Workshop, Inc. is the leading and only national company providing a make-your-own-stuffed animal interactive retail-entertainment experience. BBW’s products include a variety of pre-filled plush objects, plush items that can be stuffed with different styles, plush products that can be added noises and scents, as well as a selection of clothing, shoes, accessories, and other toys and novelty items.

Build-A-Bear Workshop’sexpected earnings growth rate for the current year is 21.5%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. BBW presently carries a Zacks Rank #2.

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