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U.S. Online Spending to Rise: 4 Retail Picks

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Online spending could considerably increase during the upcoming holiday season, growing as much as 14.8% this year to reach $124.1 billion, according to a Reuters.

Forecast for growth in online retail sales is significantly higher than the 2.7% increase predicted for brick and mortar retail stores, indicative of growing consumer preference for online shopping over physical retail outlets.

The growth was predicted by Adobe Analytics, the web analytics wing of Adobe Systems (ADBE - Free Report) , on Nov 1. The company analyzes more than 55 million products sold by retailers in the United States.

Given the promising forecast for online spending, retail businesses that majorly operate by means of their online stores could be promising bets.

Retailers With Significant Online Presence to Win

According to the Adobe forecast, the five-day period between Thanksgiving and Cyber Monday will generate $23.4 billion worth of online sales.

Cyber Monday could contribute $7.8 billion to the total online sales, followed by Black Friday and Thanksgiving’s $5.9 billion and $3.3 billion, respectively.

The report cited that businesses that have strong online presence along with their brick and mortar outlets will witness significant spike in sales, given that consumers prefer to check out their online selection at a store before ordering it online.

“For most retailers now, the online and offline experiences are blending together much more,” director of Adobe Digital Insights, Taylor Schreiner, told Observer.

Schreiner’s insight was based on the fact that the trend of merging online and offline experiences can be witnessed in Amazon acquiring Whole Foods and launching Amazon Go.

“Now competition among retailers is for who can best fulfill customer expectations in both the real and virtual worlds. The focus on both online and offline certainly changes the competitive landscape,” Schreiner added.

The overall November-December period sales are likely to increase between 4.3% and 4.8% this year, the National Retail Foundation cited in October.

Stocks to Buy

We have hand-picked the following retail stocks that you can consider betting on ahead of the online sales spike.

Restoration Hardware Holdings Inc. (RH - Free Report) is a luxury brand in the home furnishings marketplace. The company carries a Zacks Rank #1 (Strong Buy) and its earnings per share (EPS) is expected to grow 150.1% this year. Restoration Hardware shares have gained 40% so far this year.

Boot Barn Holdings Inc. (BOOT - Free Report) is a lifestyle retail chain that deals in western and work-related apparel, footwear and accessories. Boot Barn carries a Zacks Rank #2 (Buy) and its shares have gained 52.8% year to date. Its EPS is estimated to grow 77.1% in 2018.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon.com, Inc. (AMZN - Free Report) carries a Zacks Rank #2 and its earnings could grow 322.2% this year. Amazon’s shares have gained 42.4% so far this year.

Nordstrom Inc. (JWN - Free Report) is a leading fashion specialty retailer that offers compelling clothing, shoes and accessories for men, women and children. The retail brand carries a Zacks Rank #2 and its shares have gained 38.2% year to date. Nordstrom’s EPS could grow 20.6% in 2018.

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