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The retail sector hogs all the attention with the advent of the holiday season. It is time you lift your spirits by adding potential winners to your portfolio that will trump all odds and stand out with great earnings surprises, when they report quarterly results. A rational investment can fetch you higher returns with the ensuing stock price appreciation.

We are entering the festive season with Halloween, Thanksgiving, Black Friday, Cyber Monday and of course Christmas lined up to take you on a holiday shopping spree. So, do not let your blood pressure rise with stock market volatility. Instead, start filling your holiday hampers. Competition will certainly be tough, be it at the brick-and-mortar stores or online portals, the retailers need to be hawk-eyed.

Improving labor market, rising disposable income and elevated consumer confidence points to an uptick in sales during this festive season, and retail bellwethers will leave no opportunity to make the most of the season that accounts for a sizeable chunk of yearly revenues and profits. Be it early-hour store openings, huge discounts, promotional strategies, price matching and free shipping on online purchases, retailers will go the extra mile.

As retailers are gearing up for the season, in the same fashion you can also fine tune your portfolio to include stocks that are likely to trump estimates. This leads to the obvious question of how to find the potential winners? Given the numerous stocks in the sector the Zacks methodology could offer some relief.

Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

5 Likely Winners for the Season

Zumiez Inc. (ZUMZ - Free Report) , which is expected to report third-quarter fiscal 2017 results on Dec 7, is a solid bet with a long-term earnings growth rate of 18%. The Zacks Consensus Estimate for the quarter is pegged at 47 cents. The company delivered an average positive earnings surprise of 27.1% in the trailing four quarters.

This specialty retailer of apparel, footwear and accessories has an Earnings ESP of +2.67% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors can even count on Dave & Buster's Entertainment, Inc. (PLAY - Free Report) with a Zacks Rank #2 and an Earnings ESP of +9.86%. The Zacks Consensus Estimate for the quarter is pegged at 24 cents. The company registered an average positive earnings surprise of 34.4% in the preceding four quarters and has a long-term earnings growth rate of 14.8%. The company, which owns and operates entertainment and dining venues, is anticipated to report third-quarter fiscal 2017 results on Dec 5.

Another stock that you may consider is Big Lots, Inc. (BIG - Free Report) with a Zacks Rank #2 and an Earnings ESP of +15.39%. The Zacks Consensus Estimate for the quarter is pegged at 4 cents. The company delivered an average positive earnings surprise of 81.1% in the trailing four quarters and has a long-term earnings growth rate of 13.5%. This non-traditional, discount retailer is expected to come out with third-quarter fiscal 2017 financial numbers on Dec 1.

Another lucrative option is Best Buy Co., Inc. (BBY - Free Report) , the retailer of technology products, services, and solutions. The stock carries a Zacks Rank #2 and has an Earnings ESP of +1.85%. The Zacks Consensus Estimate for the quarter is pegged at 79 cents. The company registered an average positive earnings surprise of 27.2% in the trailing four quarters and has a long-term earnings growth rate of 12.4%. The company is likely to announce third-quarter fiscal 2018 results on Nov 16.

We also suggest investing in McDonald's Corporation (MCD - Free Report) , which is slated to report third-quarter 2017 results on Oct 24. This restaurant operator has a Zacks Rank #2 and an Earnings ESP of +1.30%. The Zacks Consensus Estimate for the quarter is currently pegged at $1.74. The company has a long-term earnings growth rate of 9.4% and has delivered an average positive earnings surprise of 7.4% in the trailing four quarters.

These five stocks are not the only ones to bet on. With the help of the Zacks Stock Screener and some permutation and combination, you can find out other retail stocks that have the potential to beat the market.

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Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

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