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Are you wondering whether the stock market will witness a Santa Claus rally this time around? Well, the month of December has been a favorable one for investors as stocks tend to gain momentum just before the curtains draw on a year. This year is no exception. There’s a sense of optimism despite challenges like inflation, higher interest rates and geopolitical tensions.
Santa Claus Rally: A Festive Boost for Investors
The essence of the Santa Claus Rally lies in heightened consumer spending and optimism that permeates the festive period. Retail stocks, in particular, often witness increased demand as shoppers open their wallets to fulfill the season's gift-giving traditions. The surge in retail activity creates a favorable environment for investors to strategically position themselves in stocks poised to benefit from the holiday shopping spree.
Consumer resilience plays a crucial role, supported by a robust job market and wage growth. Recent data from the Bureau of Labor Statistics unveils that 199,000 jobs were added in November. The unemployment rate paints an encouraging picture, dropping to 3.7% from 3.9% in October. In tandem with this, U.S. consumer confidence experienced a promising uptick in November, bouncing back from a three-month decline. This rebound is especially significant as it aligns with the crucial holiday shopping season.
The broader economic landscape, coupled with the Federal Reserve's expected monetary policy, holds the potential to sway equities in the final weeks of 2023. The S&P 500 index has already displayed a noteworthy performance, boasting a robust 19.9% year-to-date increase.
In this context, we turn our attention to four promising retail stocks — Brinker International, Inc. (EAT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and American Eagle Outfitters, Inc. (AEO - Free Report) .
The aforementioned stocks are strategically positioned to ride the Santa Claus rally as the retail sector takes center stage during the holiday season. According to the National Retail Federation, holiday retail sales are expected to improve 3-4% over the last year, reaching an estimated $957.3-$966.6 billion.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Investors can count on Brinker International, one of the world's leading casual dining restaurant companies. Brinker International is unwavering in its commitment to enhancing customer engagement and boosting revenues through various sales-boosting strategies. These include optimizing the menu and fostering innovation, reinforcing its value proposition, improving food presentation, implementing effective advertising campaigns, optimizing kitchen systems and introducing an enhanced service platform.
The Zacks Consensus Estimate for Brinker International's current financial-year sales and earnings suggests growth of 5.1% and 26.2%, respectively, from the year-ago reported figure. EAT, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 223.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch 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 13.3% from the year-ago period. The stock sports a Zacks Rank #1.
Amazon is also worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.
The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 11% and 276.1%, respectively, from the year-ago reported figure. AMZN, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 54.9%, on average.
American Eagle Outfitters 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. Its store designs and online enhancements demonstrate a commitment to improving the customer experience.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal sales and EPS suggests growth of 4% and 39.2%, respectively, from the year-ago reported figure. AEO, which carries a Zacks Rank #2, delivered a trailing four-quarter earnings surprise of 23%, on average.
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4 Retail Stocks to Ride the Santa Claus Rally
Are you wondering whether the stock market will witness a Santa Claus rally this time around? Well, the month of December has been a favorable one for investors as stocks tend to gain momentum just before the curtains draw on a year. This year is no exception. There’s a sense of optimism despite challenges like inflation, higher interest rates and geopolitical tensions.
Santa Claus Rally: A Festive Boost for Investors
The essence of the Santa Claus Rally lies in heightened consumer spending and optimism that permeates the festive period. Retail stocks, in particular, often witness increased demand as shoppers open their wallets to fulfill the season's gift-giving traditions. The surge in retail activity creates a favorable environment for investors to strategically position themselves in stocks poised to benefit from the holiday shopping spree.
Consumer resilience plays a crucial role, supported by a robust job market and wage growth. Recent data from the Bureau of Labor Statistics unveils that 199,000 jobs were added in November. The unemployment rate paints an encouraging picture, dropping to 3.7% from 3.9% in October. In tandem with this, U.S. consumer confidence experienced a promising uptick in November, bouncing back from a three-month decline. This rebound is especially significant as it aligns with the crucial holiday shopping season.
The broader economic landscape, coupled with the Federal Reserve's expected monetary policy, holds the potential to sway equities in the final weeks of 2023. The S&P 500 index has already displayed a noteworthy performance, boasting a robust 19.9% year-to-date increase.
In this context, we turn our attention to four promising retail stocks — Brinker International, Inc. (EAT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and American Eagle Outfitters, Inc. (AEO - Free Report) .
The aforementioned stocks are strategically positioned to ride the Santa Claus rally as the retail sector takes center stage during the holiday season. According to the National Retail Federation, holiday retail sales are expected to improve 3-4% over the last year, reaching an estimated $957.3-$966.6 billion.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
Investors can count on Brinker International, one of the world's leading casual dining restaurant companies. Brinker International is unwavering in its commitment to enhancing customer engagement and boosting revenues through various sales-boosting strategies. These include optimizing the menu and fostering innovation, reinforcing its value proposition, improving food presentation, implementing effective advertising campaigns, optimizing kitchen systems and introducing an enhanced service platform.
The Zacks Consensus Estimate for Brinker International's current financial-year sales and earnings suggests growth of 5.1% and 26.2%, respectively, from the year-ago reported figure. EAT, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 223.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch 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 13.3% from the year-ago period. The stock sports a Zacks Rank #1.
Amazon is also worth considering. The company’s robust e-commerce platform, renowned for its vast product selection and efficient delivery services, continues to be a primary driver of revenue growth. Prime membership, a cornerstone of Amazon's success, not only fosters customer loyalty but also drives recurring revenues through subscription fees, offering members exclusive access to a myriad of services, such as expedited shipping.
The Zacks Consensus Estimate for Amazon’s current financial-year sales and EPS suggests growth of 11% and 276.1%, respectively, from the year-ago reported figure. AMZN, which carries a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 54.9%, on average.
American Eagle Outfitters 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. Its store designs and online enhancements demonstrate a commitment to improving the customer experience.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal sales and EPS suggests growth of 4% and 39.2%, respectively, from the year-ago reported figure. AEO, which carries a Zacks Rank #2, delivered a trailing four-quarter earnings surprise of 23%, on average.