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Holiday Shopping Season Off to a Smashing Start: 5 Winners

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Consumers have thronged stores and logged onto online sites for the best bargains from Thanksgiving Day to Cyber Monday. As widely expected, a healthy economic backdrop and a two-decade high consumer confidence have provided the wherewithal for such high spends.

It goes without saying that retailers have started off the 2018 holiday shopping season with a bang, which undoubtedly calls for investing in the space.

Happy Holidays for Retailers?

Black Friday and Thanksgiving Day sales have been massive this year. Mastercard total spend for Black Friday (online and offline) was $23 billion, up nearly 9% from the day after Thanksgiving last year. Mastercard has projected a 5% rise in holiday sales from November 1 through Christmas Eve this year compared to last year.

Mastercard senior advisor Steve Sadove agreed that “both online and in-store sales are tracking very well.” Brian Field, senior director of global retail consulting for ShopperTrak, added that “the fact that the shopper visits remained almost the same this year compared to the last three years proves that the notion of Black Friday not being popular anymore is a myth and that retailers are in for a successful holiday season.”

Adobe Analytics that predominantly tracks digital sales further said that online purchases on Black Friday climbed 24% to $6.2 billion compared to last year. In fact, many shopped on their smartphones on Thanksgiving.

Online sales during Thanksgiving were $3.7 billion, up 28% from a year ago. This marked the fastest growing online sales in history on Thanksgiving Day, added Adobe. The Thanksgiving Day also turned out to be the first day in 2018 to see $1 billion in sales on smartphones. Notably, Kohl's Corporation (KSS - Free Report) had said that it had a record day for digital sales on Thanksgiving, while Walmart Inc. (WMT - Free Report) and Target Corporation (TGT - Free Report) acknowledged strong online traffic.

Nonetheless, Customer Growth Partners summed up by saying that the overall four-day Black Friday weekend sales totaled a whopping $60 billion. While consumer electronics and appliance sales jumped 6.4%, apparel sales climbed 5.4% — the best since 2011.

Cyber Monday Sales on Pace to Hit a Record High

Internet sales, by the way, were on pace to hit $7.8 billion by the end of Cyber Monday (Nov 26), marking the largest online shopping day on record, per Adobe. In fact, Adobe added that online sales are likely to touch a staggering $124.1 billion this holiday shopping season.

Deloitte strengthened the spirit by announcing that e-commerce sales are projected to increase 17% to 22% compared with last years’ holiday season, which came in at $109.9 billion. Notably, most of the purchases are widely expected to be made via mobile devices, according to market-watcher App Annie.

The top online products included Little Live Pets in toys, Nintendo Switch in video games and Roku in streaming devices, with Cyber Monday offering massive discounts on toys.  

Catalysts Behind the Rise in Spending

The strong holiday sales are being fueled by a healthy economy and high levels of consumer confidence. The U.S. economy got a boost in the third quarter, with GDP increasing at an annualized pace of 3.5%, per the U.S. Commerce Department. In fact, the country’s total output of goods and services followed an even stronger 4.2% growth in the second quarter.

The U.S. economy, thus, in the last two quarters recorded the fastest six-month growth in four years and is on track to hit the Trump administration's annual growth target of 3%. If that happens, it would be the best yearly performance since 2005, two years before the Great Recession.

At the same time, consumers in America are currently most confident in almost two decades, courtesy of a healthy labor market. The consumer confidence index climbed to 137.9 last month from 135.3 in September, per the Conference Board, a business research organization (read more: Consumer Confidence Leaps to 18-Year High: 5 Big Gainers).

5 Top Retailers to Buy Now

With the holiday shopping season getting off to a hot start, retailers are undoubtedly set to witness a strong year-end rally. Hence, it will be prudent to invest in five of the best retail stocks for handsome returns. The stocks also have a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Conn's, Inc. (CONN - Free Report) operates as a specialty retailer of durable consumer goods and related services in the United States. Currently, the company has a Zacks Rank #1. In the last 60 days, one earnings estimate moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings has risen 1.7% in the same period. The stock’s estimated growth rate for the current year is 157.9% versus the Retail - Consumer Electronics industry’s projected rally of 8.6%.

Boot Barn Holdings, Inc. (BOOT - Free Report) offers western and work-related footwear, apparel, and accessories for men, women, and kids. The company presently has a Zacks Rank #1. In the last 60 days, six earnings estimates moved up, while none moved down for the current year. The Zacks Consensus Estimate for earnings has risen 8.7% in the same period. The stock’s estimated growth rate for the current year is 78.6% versus the Retail - Apparel and Shoes industry’s estimated rise of 12.4%.

Shoe Carnival, Inc. (SCVL - Free Report) operates as a family footwear retailer in the United States. Currently, the company has a Zacks Rank #1. In the last 60 days, one earnings estimate moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings has risen 10.2% in the same period. The stock’s estimated growth rate for the current year is 59.7% versus the Retail - Apparel and Shoes industry’s projected rally of 12.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Urban Outfitters, Inc. (URBN - Free Report) retails women's and men's fashion apparel, active wear, intimates, footwear, accessories, home goods, electronics, and beauty products. Currently, the company has a Zacks Rank #2. In the last 60 days, 11 earnings estimates moved north, while one moved south for the current year. The Zacks Consensus Estimate for earnings has climbed 1.9% in the same period. The stock’s estimated growth rate for the current year is 62.9% versus the Retail - Apparel and Shoes industry’s expected rally of 12.4%.

Fossil Group, Inc. (FOSL - Free Report) designs, develops, markets, and distributes consumer fashion accessories. Currently, the company has a Zacks Rank #1. In the last 60 days, two earnings estimates moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings has risen 32.1% in the same period. The stock’s projected growth rate for the current year is more than 100% versus the Retail - Apparel and Shoes industry’s estimated growth of 12.4%.

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