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4 Retail Stocks to Buy Post Record Thanksgiving Turnout

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Retailers wait for the holiday season with as much zeal as shoppers look forward to eye-popping deals. Well, the 2023 holiday season commenced with a resounding cheer as a whopping 200.4 million shoppers swarmed both physical stores and online platforms from Thanksgiving through Cyber Monday.

This record-breaking feat, unveiled in a survey conducted by the National Retail Federation (“NRF”), not only outshone last year's remarkable figure of 196.7 million but also surpassed the NRF's optimistic projection of 182 million shoppers.

According to the NRF report, 134.2 million customers engaged in online shopping, an increase from the 130.2 million recorded in the previous year. However, the in-store foot traffic slightly dipped to 121.4 million this year from 122.7 million in 2022. The report also highlighted that shoppers, on average, spent around $321.41 on holiday-related purchases throughout the weekend.

NRF president and CEO Matthew Shay highlighted the resilience of consumers and the robustness of the economy, stating, “The period between Thanksgiving and Cyber Monday reflects the continued resilience of consumers and strength of the economy.” The robust turnout exceeded expectations, underscoring not only the festive spirit but also the economic vitality of the holiday season.

The holiday season holds significant importance for retailers as it contributes a substantial portion of their annual revenues. Consequently, retailers proactively address logistical and inventory challenges while devising comprehensive strategies to deliver a seamless shopping experience, both in physical stores and online. To cater to consumers' product preferences, retailers focus on restocking shelves with high-demand merchandise and significantly invest in digitization.

With the economic backdrop in favor, now is an opportune time for investors to explore retail stocks poised for post-record Thanksgiving turnout success. That said, we have highlighted four stocks from the sector that look well-positioned based on their sound fundamentals.

Past-Year Price Performance

Zacks Investment Research
Image Source: Zacks Investment Research

4 Prominent Picks

American Eagle Outfitters (AEO - Free Report) is worth betting on. The company’s efforts to rationalize inventory and contain costs are paying off. The strong performance of key brands like American Eagle and Aerie, coupled with expansions into premium and activewear segments, indicates potential for growth. The introduction of new store designs and online enhancements demonstrates a commitment to improving the customer experience.

The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal sales and EPS suggests growth of 3.7% and 37.1%, respectively, from the year-ago reported figure. AEO, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 23%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Abercrombie & Fitch (ANF - Free Report) is another potential pick. The company's ability to adapt, innovate and connect with customers positions it for a prosperous future. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA and the APAC, provides a solid foundation for global expansion. Its strong brand portfolio, operational efficiency and regional strategy make it an attractive investment opportunity as it continues to navigate and thrive in the evolving retail landscape.

This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids delivered a trailing four-quarter earnings surprise of 713%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 12.3% from the year-ago period. The stock carries a Zacks Rank #2.

Target Corporation (TGT - Free Report) is also worth considering. This Minneapolis, MN-based company has been making multiple changes to its business model to adapt and stay relevant in the dynamic retail landscape. Target has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers with a seamless shopping experience. These have been contributing to the top line.

The Zacks Consensus Estimate for Target’s current financial-year EPS suggests growth of 38.5% from the year-ago reported figure. TGT, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 30.8%, on average.

Investors can count on Casey's General Stores (CASY - Free Report) . Capitalizing on its extensive store network, Casey's has effectively catered to customer demands. Casey's price and product optimization strategies, increased penetration of private brands and digital engagements comprising the mobile app and online ordering capabilities are commendable. As the third-largest convenience retailer and the fifth-largest pizza chain, its distinctive self-distribution model, robust Inside category performance and strategic acquisitions are noteworthy strengths.

The Zacks Consensus Estimate for Casey's current financial-year sales suggests growth of 1.5% from the year-ago reported figure. CASY, which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 17.5%, on average.

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