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5 Retail Stocks That Are Solid Buys This Black Friday

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Black Friday is here and shoppers are expected to grab the best deals of the year on items like electronics, home goods and toys. Consumers are undoubtedly willing to spend as they are in good financial shape and the economy continues to grow steadily. Retailers are thus poised to see a substantial uptick in sales, which makes them solid bets for now.

Black Friday Sales Predictions

The National Retail Federation and Prosper Insights & Analytics (NRF) noted that this Black Friday, 114.6 million people will splurge. Thus, Black Friday will be the busiest day during the Thanksgiving Day through Cyber Monday holiday period.

Consumers are, in fact, willing to spend more on Black Friday compared with Small Business Saturday or Cyber Monday, per BlackFriday.com. Adobe Analytics chipped in that Black Friday online sales are expected to grow 20.5% year over year, bringing in an estimated $7.5 billion. But, this sales growth doesn’t end with Black Friday. As a matter of fact, retailers are expected to witness $9.4 billion sales on Cyber Monday as well.

In fact, this year’s holiday season is expected to be a bumper one. According to the NRF, holiday retail sales — excluding restaurants, automobile dealers and gasoline stations — are projected to rise 3.8% to 4.2% year over year to a total of $727.9 billion to $730.7 billion.

What’s more, the NRF anticipates online sales growth between 11% and 14% to reach a total of $162.6-$166.9 billion, suggesting a rise from $146.5 billion reported during the same period last year.

Last but not the least, per Deloitte’s annual holiday retail forecast, holiday sales are expected to increase between 4.5% and 5% this year. Deloitte further forecasts a 14-18% rise in e-commerce sales during the holiday season on a year-over-year basis.

Why Consumers Are Willing to Splurge

With the economy growing at a healthy rate and the labor market remaining strong, consumers are willing to spend more this Black Friday and beyond. Majority of shoppers, in fact, are expected to make the most of the deals and promotions retailers will offer, while the rest said that the upcoming holiday season is traditionally the time to shop and they are willing to indulge.

The pace of U.S. economic expansion picked up in the third quarter. Per the Bureau of Economic Analysis, the economy grew at an annualized rate of 2.1% in the three months ended Sep 30, more than the initial estimate of 1.9% and an uptick from the 2% pace in the second quarter. The unemployment rate, by the way, remains near the lowest level in 50 years and average hourly earnings improved 0.1% last month to a year-over-year 3% gain, also in line with estimates.

5 Top Retail Picks for Now

Taking the expected bumper Black Friday sales into account, 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).

Boot Barn Holdings, Inc. (BOOT - Free Report) , a lifestyle retail chain, operates specialty retail stores in the United States. The company currently sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved 6.7% north over the past 60 days. The company’s expected earnings growth rate for the current year is 30.4% compared with the Retail - Apparel and Shoes industry’s estimated rise of 0.4%.

Burlington Stores, Inc. (BURL - Free Report) operates as a retailer of branded apparel products in the United States. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 13.4% compared with the Retail - Discount Stores industry’s expected growth of 9.4%.

Target Corporation (TGT - Free Report) operates as a general merchandise retailer in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 3.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 18.4% compared with the Retail - Discount Stores industry’s expected growth of 9.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Walmart Inc. (WMT - Free Report) engages in the retail and wholesale operations in various formats. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has ticked up 1.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 1.2% in contrast to the Retail - Supermarkets industry’s projected decline of 7.7%.

RH (RH - Free Report) operates as a retailer in the home furnishings. It offers products in various categories, including furniture, lighting, textiles, décor, outdoor and garden, tableware, and child and teen furnishings. RH currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 26.9% compared with the Retail - Home Furnishings industry’s projected increase of 3.5%.

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