The busiest season for retailers gets underway with Black Friday this week as shoppers rush to stores in search of the best deals for their holiday shopping lists. The competition between major retailers is heating up as they try to lure consumers into their stores with enticing deals.
The solid job market is also set to bolster spending during the holiday season. Investors should look to retail companies who have expanded their e-commerce presence and have momentum heading into the vital shopping season.
Let’s take a look at three stocks that look poised to benefit from the influx of shoppers.
Target (TGT - Free Report) has nearly doubled its market value in 2019 after posting quarterly reports that captivated investors. The retailer is coming off a third quarter where it saw its comp sales rise 4.5%, which sent the stock to an all-time high.
Target has not only expanded its e-commerce operations but has competed with the digital commerce juggernauts. Target’s digital comp sales rose 31% in Q3, thanks to the omnichannel experience it provides for its customers. Its same-day fulfillment services continued to be successful in Q3 and it should help Target drive traffic in the fourth quarter as well.
In addition to its digital success, Target’s partnership with Disney (DIS - Free Report) might bolster Target’s performance. Our Q4 estimates call for TGT’s earnings to climb 10.5% to $1.69 per share and for sales to leap 4.24% to $23.95 billion. Target’s earnings estimates have trended higher, helping TGT stock earn a Zacks Rank #1 (Strong Buy).
Best Buy (BBY - Free Report) has put together a solid year, as its shares up over 54%. The electronics retailer reported its third quarter performance today that sent its stock to a 52-week high as its revenue popped 1.8% to $9.76 billion and earnings climbed 21.5% to $1.13 per share. Comparable sales rose 1.75% and digital sales rallied 15% in the quarter, as Best Buy has made the necessary adjustments to its digital realm. On top of its solid third quarter, Best Buy’s free next day shipping offer is sure to give the retailer a boost this holiday season.
Best Buy is able to offer shipping speeds that help put it right on par with Amazon (AMZN - Free Report) because it uses its stores to fulfill online orders. This allows the company to match its rival’s delivery speeds without a capital-intensive distribution center network. Its expansion into the health market also helps the company diversify its revenue stream, which can buoy its business. Best Buy sports a Zacks Rank #3 (Hold) but our rank along with our estimates may change after today’s quarterly report is accounted for.
Costco (COST - Free Report) is another retailer that looks poised to cash in on the busiest shopping season of the year. The wholesale retail company has seen its shares rise about 48% YTD and may go higher as the shopping season ramps up. Costco will be a likely destination for families during the holidays because of its deals on grocery items and much more.
Its Black Friday deals are also competitive as consumers can save hundreds of dollars on a new Apple (AAPL - Free Report) laptop and household appliances. The company is also a solid long-term stock to own as it makes the vast majority of its profit from its membership fees and retains its members with its sustained low prices and new product offerings. Our full fiscal year estimates anticipate earnings will climb 4.5% to $8.56 per share and for sales to jump 6.7% to $162.93 billion. Costco is listed as a Zacks Rank #2 (Buy) at the moment.
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