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7 Retail Stocks to Buy That Dominated Thanksgiving Shopping

Most of the holiday winners were already doing well in 2019

Source: Shutterstock

The National Retail Federation reports that 189.6 million U.S. consumers shopped at some point between Thanksgiving Day and Cyber Monday. 

The number of consumers who shopped at some point during the holiday weekend increased by 14% over last year, setting a record in the process. 

“Americans continue to start their holiday shopping earlier in the year, and Thanksgiving is still a critical weekend for millions,” NRF President and CEO Matthew Shay said. “Whether they’re looking for something unique on Main Street, making a trip to the store or searching for the best deals from their mobile device, this is when shoppers shift into high gear.”

Over the five days, the average shopper spent $361.90, 16% higher than last year. Those between 25 and 34 years old spent an average of $440.46, more than any other age group. 

Interestingly, Black Friday got more online shoppers than Cyber Monday, the traditional day for online retail. 

Heading into the Thanksgiving weekend, the retailers who were already doing well in 2019 tended to be the big winners. Here are seven retail stocks to buy that won this year’s Thanksgiving weekend shop-a-thon. 

Retail Stocks to Buy: Amazon (AMZN)

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In what has to be the least surprising news from Thanksgiving weekend retail, Amazon (NASDAQ:AMZN) announced that Cyber Monday was the company’s single biggest sales day in its history. 

Although it hasn’t released specific financial results, it said that customers bought millions of products between Thanksgiving Day and Cyber Monday. 

“We’re focused on making this holiday season more convenient than ever for customers, especially given how short this holiday shopping season will be,” Jeff Wilke, CEO Worldwide Consumer at Amazon, said in a company release. “We are thrilled that customers continue to come to Amazon in record numbers to discover what they need and want for the holidays.”

In terms of Cyber Monday, Amazon had good luck selling fashion items and toys. More importantly, its third-party sellers sold more than at any other time in the company’s history. 

While none of this likely comes as a surprise to owners of AMZN stock, it’s nice to know Jeff Bezos and company can still pack them in. 

Best Buy (BBY)

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When it comes to foot traffic, Best Buy (NYSE:BBY) did the best of the large retailers on Black Friday. And that ought to translate into excellent sales and profit growth in the fourth quarter. 

This year, purchases made on phones accounted for 36% of all transactions, suggesting that Best Buy probably did alright on Cyber Monday.

On Nov. 26, two days before Thanksgiving, Best Buy reported solid Q3 2020 results, with sales up 2% and adjusted profits a healthy 20%. As a result of its third-quarter results, Best Buy CEO Corie Barry was confident heading into the holiday weekend. 

“In the near term, we are excited about our holiday plans. Our teams have once again put together a best-in-class assortment, prepared an amazing set of deals and ensured we have great inventory availability,” Barry stated in Best Buy’s earnings release. “Customers ordering online will get free next-day delivery on thousands of items all season long with no membership or minimum purchase required. They can also choose to pick up their products in a store within an hour of placing their order.” 

Through October and November, the company prepared for the six-week holiday sprint. And it’s paying off. The NRF estimates that U.S. retail sales will be as high as $730.7 billion. With numbers like that, Best Buy stock should carry a lot of momentum into 2020.

Lululemon (LULU)

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When it comes to retail stocks, Lululemon (NASDAQ:LULU) has had one of the best years in the markets, up 85% year-to-date. 

When you’ve got 17% comparable-store sales growth and a growing e-commerce business, you don’t need to do as much promotional work to get the buyers in the door. That leads to higher profits and happy shareholders. 

“As noted, Vans and Lululemon used little in-store or online promotions to drive robust traffic,” Cowen analysts said about Black Friday“While many Black Friday promos have been planned for months, the intensity of promotions across the space feels heightened relative to last year and prior years, which speaks to margin issues across the softlines space, particularly in apparel.”

Lululemon had no such problems. 

While LULU did have markdowns similar to last year, the retailer’s messaging was spot-on, driving record traffic and conversion numbers during the five-day holiday, according to Wedbush analyst Jen Redding. 

Expect LULU to announce strong results when it reports Q4 2019 in late March. 

Macy’s (M)

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It’s too early to tell if Macy’s (NYSE:M) results over the Thanksgiving Day weekend will be strong enough to reverse a slide that’s seen M stock fall by 50% year-to-date. It’s fallen so far that it’s currently yielding more than 10%, an unbelievable return for those brave enough to jump in. 

Any way you slice it, 2019 has not been a good year for department stores. That said, Morgan Stanley analyst Kimberly Greenberger did say that Macy’s had higher year-over-year traffic over the Thanksgiving weekend, which suggests consumers were willing to give it a second look. 

Hopefully, CEO Jeff Gennette will provide more details about its holiday performance over the next few weeks. While profits won’t be all that hot given the discounts it was handing out during the five-day sale, the fact it’s considered to have been a Thanksgiving winner by some experts suggests it will be the best news it’s had in months. 

Suffice to say, of the seven retail stocks on this list, Macy’s has the most fleas. 

Shopify (SHOP)

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Of the seven stocks on the list, Shopify (NYSE:SHOP) is the only one that’s not a retailer, but rather a tech company that helps retailers sell their wares online and off. 

Initial global data from Shopify for Thanksgiving Day suggests the more than 1 million merchants who use the company’s platform did very well in the first 24 hours of the five-day holiday weekend. 

Total sales for Thanksgiving Day were $442 million, with peak sales of $671,000 per minute at 3:05 p.m. on Nov. 28. Something like 5.3 million consumers bought something from a Shopify merchant that day, with 69% of the sales made through mobile devices. 

Interestingly, Vernon, California, was its top-selling city.  

In the four days between Black Friday and Cyber Monday, Shopify’s merchants had total sales of more than $2.9 billion, 61% higher than the same period a year ago. At the weekend’s peak sales, merchants were ringing up $1.5 million in sales per minute.

Given these results, a $500 share price can’t be too far away. 

Target (TGT)

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In the days leading up to the Thanksgiving holiday weekend, I argued that Target (NYSE:TGT) was a better stock to own than Walmart (NYSE:WMT). 

My rationale? CEO Brian Cornell has taken the once beleaguered discount retailer and turned it into a well-oiled machine. It wasn’t too long ago that Target was licking its wounds after the company’s disastrous foray into Canada.

It seems like years ago now that it cut and run, costing shareholders billions in losses from the failed experiment. But now it’s back, and that’s got me thinking $200 is just around the corner.   

For example, after announcing killer Q3 2019 results on Nov. 20, TGT stock has gained 12% in the nine trading days since and has a total return year-to-date of 89%. 

As a result of strong quarterly sales and a stock that’s hotter than a pistol, it’s not surprising analysts reported Target having strong traffic throughout the Black Friday weekend. 

Of all the retailers on this list, Target’s on the biggest roll.    

Walmart (WMT)

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Heading into the Thanksgiving weekend, both Walmart and Target were on a bigger roll than Amazon. 

That’s according to research firm Edison Trends, which reported Walmart’s customers spent 51% more per transaction in the first two weeks of November than in the same period last year. By comparison, Target’s customers spent 47% more while Amazon had to settle for a 32% increase. 

How did Walmart do over the five-day Thanksgiving weekend?

Well, when analysts were asked who did the best on the massive holiday shopping weekend, most mentioned Walmart in addition to Target, Best Buy and Lululemon. At least that was how things were shaking out early on Thanksgiving weekend. 

“A positive ‘perfect storm’ of retail growth drivers, including job growth, rising wages, benign gas prices, healthy household balance sheets, and the ‘wealth effect’ stemming from the S&P 500’s gain of 24 per cent this year, led to four-day Black Friday weekend sales growth of 5.4 per cent, to a record US$69 billion, according to Customer Growth Partners (CGP),” BNN Bloomberg reported.

Walmart, despite some issues with its e-commerce businesses, including losses in the billions, has managed to keep pace with the rest of the retail elite, and that should pay dividends for WMT stock heading into 2020.   

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2019/12/7-retail-stocks-to-buy-that-dominated-thanksgiving-shopping/.

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