It’s been a challenging few years for the consumer discretionary sector, but with the all-important Christmas shopping season on the horizon, many investors are looking for hot holiday stocks to capitalise. The post-thanksgiving sales may not be the one-day event they once were, but the final few weeks of the fourth quarter are as important as ever for retailers looking to get back into the black.

This year, things will be more challenging as uncertain consumers are a little choosier about where they direct their dollars. As discretionary income dwindles, many families will be looking to do more with less. That means discounts will be plentiful this year, as retailers compete to bring customers in the door. But that doesn’t mean the shopping spree is on hold— this year people are planning to spend an average of $1,652 on holiday shopping, which is above pre-pandemic levels for the first time.

Convenience will be another factor to watch when it comes to holiday stocks to buy. People are becoming more cash-poor, but they’re also strapped for time. Retailers with strong logistical networks that can cater for last-minute shoppers will be able to grab a valuable slice of the pie. Other perks like free and simple returns will be a draw for those gift-givers who aren’y 100% sure what their recipient wants.

Finally, it pays to look past the obvious. While retailers might spring to mind first when you’re thinking about the beneficiaries of a shopping period, there are other winners as well. Payment companies are also likely to see more activity, which should help bolster the top line through the end of the year. 

Walmart (WMT)

Walmart (NYSE:WMT) is the OG of Black Friday, and while the days of lining up at the door at the crack of dawn may be over, the discount superstore is still one of the best holiday stocks to buy. The Walmart name has become somewhat synonymous with low-cost, meaning it’s likely to be the first port of call for those looking to stretch their dollar a little further.

Plus, shopping at Walmart is convenient. It’s not only the home of bargain toys and housewares, it’s also got a massive grocery section to fill the holiday table. 

With so much on offer to tempt holiday shoppers, you might expect the group to be flying high ahead of the season. But CEO Jeff Furner’s warned that weigh-loss drug Ozempic is also shrinking the size of shopping carts, with people taking it buying fewer groceries. This has taken some of the shine off Walmart stock, but it’s a fear that could be overdone. Not only is Walmart well-diversified with several product categories, but the shift could develop into healthier choices rather than fewer items, which wouldn’t necessarily sting as badly. 

Amazon (AMZN)

You can’t talk about hot holiday stocks to buy without including Amazon (NASDAQ:AMZN) The festive season conjures up images of tinsel, lights, and brown Amazon boxes lining the streets. It’s become a staple for last-minute shoppers and those who want to avoid the crowds. The convenience of fast delivery, free and easy returns, and an unbeatable selection of items at your finger tips is pretty hard to pass up this time of year.

Online holiday shopping is a strong trend that contributed to most of the festive spending growth last year. This is likely to be the case this time around, and Amazon will own a huge piece of that pie. Notably, retail isn’t really Amazon’s bread and butter these days. Instead it’s the group’s cloud computing sector that’s in the driver’s seat.

But the e-commerce side is still an important part of the its growth story, with AI set to deliver some future growth for the firm thanks to it’s huge trove of customer data. 

Visa (V)

While retailers have to worry about inventory and brand strength this time of year, credit card companies are simply along for the ride making them excellent picks among holiday stocks to buy. Visa (NYSE:V)is one such company whose business model means people looking to put off their holiday costs come with minimal risk and plenty of rewards. Visa makes money when people spend more on their cards with both the value and number of transactions contributing to the group’s income. It’s not physically lending to consumers, so defaults aren’t as much of a risk.

Still, as consumer debt increases so do the risks for Visa— a slowdown in spending could be a problem for the group a there are very few growth levers to pull. That’s meant the group’s valuation isn’t quite as demanding as it has been in the past, but this could be a good entry point for those looking to capitalise as credit cards come out over the festive season.

On the date of publication, Marie Brodbeck did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.