Here we go again — it’s holiday shopping time.
If you are like me, you stay far away from the malls and stores and sit quietly at your computer, gobbling up gifts from the internet. Then you sip your hot apple cider as the goods get delivered to your door.
Regardless of your shopping style, we are headed into the big retail season, with Black Friday just around the corner. The day is sometimes, but not always, indicative of how retail performs this season, and you’ll need some stocks to watch.
There are many stores that qualify as retail, but I’m talking about the department-style stores. I know that Apple (AAPL) will probably do really well, as will some of the electronics stores. But what about the traditional retailers as stocks to watch?
Consumer credit usage is up, and consumer confidence is the highest it has been in years. Overall, that suggests good times, but I think it may be retailer-specific.
Retail Stocks to Watch: Target (TGT)
I think Target (TGT) may be worth looking at as one of the stocks to watch.
The consumer experience, in regards to department stores, is starting to trend in Target stock’s direction. It’s not a full-on discounter, and it’s not an upscale luxury brand. It has a modest selection of just about everything and at very reasonable prices.
One doesn’t have to bust the bank by shopping at Bed Bath & Beyond (BBBY) when the same stuff is essentially available at Target. Likewise, you can get great cookware and stoneware at Macy’s (M), but you can get serviceable items from those same categories for less at Target.
Target is also going to offer all the same Black Friday deals from its stores on the internet, and it will be open Thanksgiving with a Black Friday presale as well.
Not only that, but Target stock could be helped by the company being aggressive with a 20% discount to customers that spend $75 or more on Black Friday.
Retail Stocks to Watch: Amazon (AMZN)
There is no greater retailer than Amazon (AMZN). I think there are some possible other traditional retailers worth looking at, which I’ll mention in a moment, but Amazon stock really is one of the top retail stocks to watch.
I think Amazon has so much over other retailers because it truly does offer everything at this point. For those who know what they want without having to research too much, or who refuse to step into a store, Amazon is the default selection.
Now, Amazon may not be the default provider for those who want coupons or who visit the stores. Like we see with Target, 20% coupons will get people into stores. That’s the same tactic that Macy’s has always used.
Overall, however, Amazon stock seems likely to outperform everyone, thanks to selection.
Retail Stocks to Watch: Market Vectors Retail ETF (RTH)
What about all the other retailers as far as stocks to watch? You could certainly choose one or two to focus on and hope they deliver and grab some outperformance.
However, I think the safer bet is to go with an ETF. That way, all the stocks to watch are going to be bundled into the fund, and you don’t have to worry about hitting or missing specific selections.
I like the Market Vectors Retail ETF (RTH). This is a pretty solid traditional retail play, and its top ten holdings account for 65% of total assets. So you are making a somewhat concentrated bet on the sector, but not one that is so without diversification that if one or two crap out that you’ll lose your shirt.
As of this writing, Lawrence Meyers owned shares of AAPL.