It’s that time of year again. The winter chill sets in. The nights get darker. And the smell of turkey dinners, cinnamon and pumpkins fill the air.
And, of course: The Black Friday kickoff of the holiday shopping season. Which actually starts on Thursday evenings in more and more locales.
The retail sector is ready. Since peaking in early 2015, the Retail SPDR ETF (NYSEARCA:XRT) has lost roughly 20% amid reports of empty malls, competition from Amazon.com, Inc. (NASDAQ:AMZN) and tepid shopping traffic.
Soul searching, and corporate strategy shakeups, have followed. Now, many familiar names in the industry are down to their fighting weight and ready for a solid holiday season.
Here are five to watch:
Retail Stocks to Buy for Black Friday: Gap (GPS)
Gap Inc (NYSE:GPS) shares are surging higher after the company reported better-than-expected comp-store sales for the prior quarter, ending a long string of negative results.
Overall sales increased 1.1% to $3.84 billion. Barclays analysts raised their price target in response, highlighting underlying momentum in GPS stock.
Gap will next report results on Feb. 15. On Nov. 16, earnings of 58 cents per share beat estimates by four cents on a 1.1% rise in revenues. Forward guidance was solid as well.
Retail Stocks to Buy for Black Friday: Foot Locker
Foot Locker, Inc. (NYSE:FL) shares are surging nearly 30% on Friday, closing the gap from the post-earnings wipeout in August, after reporting better-than-expected earnings of 87 cents per share, seven cents ahead of estimates.
This despite a 0.8% decline in revenues. Forward guidance was strong as well, with smaller comp-store sales decline anticipated.
What really got investors excited was the announcement of an “elevated partnership model” with Nike, with a pop-up store in New York focused on Nike products and the hiring of Nike-focused employees to elevate the shopping experience across the brand’s stores.
The move is unlocking short-covering buying, with 10.5% of the float sold short.
Retail Stocks to Buy for Black Friday: Abercrombie
Abercrombie & Fitch Co. (NYSE:ANF) is surging nearly 30% on Friday after reporting better-than-expected earnings of 30 cents per share vs. the 21 cents expected.
Revenues grew 4.6% from last year. This is a decisive change in the positive direction from the previous two quarters, with losses of 16 cents and 72 cents per share reported.
Short-covering is in play here as well, with nearly 23% of the share float sold short. Top-line growth is turning around for the company, which is trying to reimagine itself after its old preppy-chic image grew tired: Comp-store sales increased 4% vs. the 0.5% analysts were expecting.
Retail Stocks to Buy for Black Friday: Best Buy
Best Buy Co Inc (NYSE:BBY) shares look ready for an upside breakout from a multi-month consolidation range going back to May after reporting solid quarterly results on Thursday.
Earnings of 78 cents per share matched estimates on a 4.2% rise in revenues. Impressive considering the drag on mobile sales from a delayed iPhone X launch.
The company will next report results on Feb. 15 before the bell. Momentum is increasing, with same-store sales up 4.4% last quarter after increasing 1.8% in the year-ago period.
With aggressive Black Friday sales on 4K TVs and other goods, the company is well positioned to have a solid holiday season.
Retail Stocks to Buy for Black Friday: Walmart
Wal-Mart Stores Inc (NYSE:WMT) shares jumped 10% this week after reporting better-than-expected quarterly results.
Up more than 40% from its March lows, the company has enjoyed increased investor interest thanks to its renewed focus on lower prices and aggressive e-commerce push with Jet.com and an upcoming high-end store brand offering; taking the fight to Amazon in a big way.
Earnings of $1.00 per share beat estimates by three cents on a 4.2% rise in revenues. Forward guidance for the holiday quarter was strong. The company will next report results on Feb. 15 before the bell.