With Thanksgiving just a few weeks over the horizon, so too is the holiday shopping season. As we all know, this critical period is where retailers and consumer-related companies make their biggest fiscal impact. Therefore, it makes sense to position yourself with consumer stocks to buy before the fun starts in earnest.
According to Deloitte’s annual holiday spending survey, American shoppers don’t intend to let ugly economic and geopolitical headwinds give them the blues. Indeed, the average U.S. household will spend nearly $1,500 this holiday season. More impressively 78% of shoppers intend to spend the same or more than they did last year. Obviously, this has strong implications for consumer stocks to buy.
Some of the key points that Deloitte brought up are as follows:
- E-commerce may grow sales to between 14%-18%.
- Those with higher income levels have increasingly elected to shop online.
- High spenders, or those will spend more than $2,100, may account for 60% of total holiday cash outlays.
- High spenders will allocate 71% of their funds to socializing and travel.
That said, potential investors of consumer stocks should monitor macroeconomic headwinds, such as the U.S.-China trade war. Because of the myriad problems pressuring our economy, I haven’t been the biggest fan of retail-centric names lately. Therefore, keep in mind that you may need to exit these names quicker than usual.
Still, heading into the biggest retail season of the year, this is an ideal time to benefit from this sector. On that note, here are eight consumer retail stocks to buy before the Thanksgiving holiday.
Typically, e-commerce giant Amazon (NASDAQ:AMZN) hits out of the ballpark. Unfortunately, its most recent third-quarter earnings report didn’t quite live up to Wall Street’s increasingly high expectations. Missing on its earnings-per-share target, AMZN stock was volatile following the disclosure.
Nevertheless, I 100% agree with our InvestorPlace’s Chris Markoch, who urged readers to go long AMZN stock despite the earnings miss. As Markoch states, Amazon’s management team had invested significantly toward expanding its operational scope. Such measures don’t come cheaply, but they are beneficial to the company’s longer-term prospects.
As far it relates to consumer stocks to buy, you’ve got to like AMZN stock here. Again, based on Deloitte’s analysis, retail experts predict e-commerce sales to jump double digits from last year. Of course, Amazon will capture a good chunk of that pie.
Also, Amazon is disrupting almost every component of the retail chain. Therefore, AMZN is easily one of the best consumer stocks to buy.
The U.S.-China trade war’s implications have weighed heavily on the broader consumer sector. Because China is an export-driven economy, with much of their products heading stateside, a protracted conflict hurts both sides. Thus, names in the retail and consumer segment have faltered. However, Costco (NASDAQ:COST) and COST stock presents a rare sector opportunity.
While it’s natural to be leery about consumer stocks to buy in this environment, COST stock consistently proves doubters wrong. On a year-to-date basis, shares are up 39%. Although this performance isn’t exactly unique, Costco shares have consistently moved higher throughout the year. In other words, this is predictable performance from a workhorse.
Furthermore, you’ve got to love COST stock if what Deloitte had to say about well-heeled shoppers rings true. According to a report earlier this year from CNBC, Costco shoppers have an average income of $92,236. To put that into perspective, the average American earns $56,516.
Although one of the most hyped and anticipated initial public offerings, Uber (NYSE:UBER) admittedly hasn’t impressed recently. The UBER stock price sits right above $33. That’s significantly below its IPO price of $45, contradicting what I called a transformative investment.
For those that are wondering, I still hold this view. Sure, UBER stock has incurred many challenges, not the least of which is a serious cash burn problem. I concede that stakeholders may need to wait a bit longer than I expected to see positive momentum. Nevertheless, over the long run, these cash outlays are painful but necessary ones for continued expansion, disruption and dominance.
Moreover, we may see a holiday bump with UBER stock. One of the points that Deloitte made was that high spenders will spend substantially on travel and socializing events. If so, such a dynamic will play perfectly into Uber’s hands. After all, we should enjoy our holidays responsibly.
Anheuser-Busch InBev (BUD)
Speaking of responsible enjoyment, this is a great time to mention Anheuser-Busch InBev (NYSE:BUD). One of the consumer stocks to buy firmly on the vice spectrum, BUD stock is nevertheless incredibly relevant at this time of the year and for obvious reasons.
Like many of my fellow red-blooded Americans, I like to knock back a few during the festivities. But I had no clue collectively how much we enjoy imbibing when the weather cools down. According to BeverageDaily.com, the average American adult doubles his or her intake between Thanksgiving and New Year’s. This is a huge plus for BUD stock.
However, I’d be remiss not to point out that shares have turned volatile recently. Due to a disappointing earnings performance coupled with growth fears in the U.S. and China markets, BUD stock tanked badly. Therefore, if you want to consider other alcoholic-beverages companies, that may be prudent.
That said, Bud Light is the most popular beer in the U.S. (despite the fact that it’s absolutely disgusting). With funds tight during the holidays, though, this factor could benefit BUD stock.
Another interesting but risky name to consider among consumer stocks is Altria (NYSE:MO). Even on its best days, MO stock is a controversial investment because of its underlying product. The ongoing vaping crisis really put the hammer on its market value. Between April and September, Altria shares formed a decisively bearish trend channel.
However, at least for the time being, you may want to have another look at MO stock. Although the holidays present a time for us to gather with friends and family, they’re also incredibly stressful. As the University of Southern California’s Keck Medicine explained, stress can trigger a social smoker or past smoker to “light up.” Further, as we discussed with Anheuser-Busch, “alcohol can lower inhibitions, which can make a person more likely to smoke, when they otherwise wouldn’t.”
Although it’s painfully cynical, many folks just don’t have the tools to abstain indefinitely. As with alcoholic-beverage companies, MO stock can benefit from the upcoming holiday environment.
Generally speaking, automakers have had a dark cloud hanging over them. From the trade war to declining interest in automobile ownership, the sector doesn’t have much confidence right now. However, the secondary or used-car market is thriving, if CarMax (NYSE:KMX) and KMX stock are any indication.
If you think about it, this dynamic makes logical sense. As Business Insider contributor Arjun Reddy pointed out, debt-strapped millennials make buying a new car less tenable. Furthermore, ride-hailing and self-driving vehicles impose longer-term risks for the auto industry.
Still, people need transportation, especially if you live in a state like California which doesn’t feature robust public transportation. In this situation, used cars make plenty of sense. You’re saving significant money on depreciation costs, which can account for 30% or more off a new sticker price. That alone drives demand for KMX stock.
Additionally, CarMax takes some of the guesswork and anxiety out of buying used cars. Along with its no-haggle pricing, you can buy extended warranties, giving you peace of mind. This too explains why KMX stock has enjoyed a great year in 2019.
Several years ago, you’d expect a company like Kroger (NYSE:KR) to provide consistently stable returns. As a necessary staple, KR stock represents one of the most important consumer stocks to buy. No matter how much you love your smartphone and other digital gadgets, you can’t eat them.
Among the biggest concerns is rising competition and the steadily encroaching threat of online grocery shopping. Currently, most people prefer to shop in stores for their groceries, which benefits Kroger and similar consumer stocks to buy. However, online delivery options are becoming more plentiful and are offering cheaper delivery rates.
Therefore, KR stock can’t ignore the e-commerce threat. Still, there’s an opportunity here to buy KR stock to advantage the holiday season. With the various festivities involved, people will flock to grocery stores, especially for last-minute items. As well, if the economy falls into recession, online deliveries will probably take a hit due to their higher costs.
Beyond Meat (BYND)
Full disclosure: I’m a skeptic of Beyond Meat (NASDAQ:BYND). Although I love the idea of eating a juicy hamburger that’s actually a vegetable, I’m lost with the details. Arguably, Beyond Meat-branded meats are healthier than the real thing, but they’re not health foods. In fact, they’re highly processed foods saturated with fats.
Like my dad always says, if it’s too good to be true, it usually is. Shortly after InvestorPlace published my article on Beyond Meat, BYND stock began to dip, then later nosedived. Since the date of publication, shares have dropped over 33%.
But now that BYND stock has had time to remove some of its excesses, a speculative trading opportunity may exist. With the Thanksgiving holiday coming up, it’s an opportunity for meat-alternative advocates to evangelize their platform. Thus, Beyond Meat makes for an interesting discounted play among consumer stocks to buy.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.