The Christmas season is drawing near. It is one of the busiest times of the year when shoppers start buying gifts for kids and loved ones. Around this time of the year, there is a phenomenon known as the “Santa Claus Rally”—a seasonal uptick in volume and trading in the financial markets that lasts untill Christmas. This seasonal phenomenon gives investors and traders a chance to pick up some gains in retail stocks that tend to thrive during this season.
It might only be November, but it’s never too early to be on the lookout for retail stocks. Looking at the previous years’ company performance, we can narrow down which stocks are worth watching or investing in anticipation of the Christmas season. While past performance may not guarantee future profits, it still helps to look at where customers prefer to buy so we can plan out the best stocks that can be a potential leader during the Santa Claus Rally. Here are three stocks worth checking out for a holiday season play.
Amazon.com, Inc. (NASDAQ:AMZN) is no stranger to anyone looking for fast gifts. It is a behemoth in the e-commerce business and a go-to site for most consumers looking for gift ideas like consumer electronics, consumer goods, and more. While the company has long expanded from being an e-commerce site with its products like the Kindle, Amazon Alexa, Echo and Ring, as well as its venture into media via Amazon Prime, it is still recognized for its sheer quantity of products.
With the company offering prime delivery for one-day shipping with its delivery and logistic partnerships, AMZN is poised to take advantage of clients’ need for speedy delivery and last-minute shopping issues. Its continuous investments in e-commerce have helped it be the top go-to site for shoppers. Looking at the company’s 4th quarter earnings in 2022, AMZN beat expectations, even with a lower-than-expected outlook, and achieved a 9% growth in net sales. This proves the company’s reliability and brand power. Not only that, its growing Amazon Web Services segment is also a big proponent in the company’s performance.
Walmart Inc. (NYSE:WMT) is the next company on our list of retail stocks. WMT is a multi-channel retailer that offers its products through its local stores and e-commerce website, www.walmart.com. It is the world’s largest retailer, with 10,500 stores and clubs in 19 countries.
Walmart also offers a membership-only warehouse club like Sam’s Club, which offers its customers wholesale shopping. The company has also recently announced its holiday kickoff event to mark the start of the holiday sale events until the rest of the year.
According to the company’s 2023 Holiday Insights Guide, 90% of households in the United States shop at Walmart every year, and 81% of surveyed customers say they’ll browse Walmart.com first for Christmas gift ideas. A total of 59% of the surveyed customers have also expressed their need to look for discount deals due to increasing prices.
With WMT’s reputation of providing the best prices for consumers, it will be in the best position to take advantage of the demand for clients looking for the best deals. Its previous year’s performance in Q4 shows that it still beats expectations regardless of economic conditions; no wonder analysts give it a “Strong Buy” rating. This makes WMT one of the top choices for a retail stock investment play.
Target Corporation (TGT)
Target Corporation (NYSE:TGT) is the last but not least retail giant on our list, offering various general merchandise through its stores and digital channels. These range from household essentials to food, beverages, and other goods. The company is well known for its significant sales during holidays like Thanksgiving and Black Friday and deals on popular Christmas toys, electronics, and other merchandise.
TGT did well in Q4 last year, with EPS beating analyst estimates by 35.97% and the following quarters consistently outperforming predictions. In addition, analysts are bullish on TGT with their “Buy” rating based on the consensus. The company recently announced that it will release new and affordable toys under $25.00 to boost sales during the holiday season. Combined with its usual holiday deals, we fully expect this will be a hit with customers looking to make the most of their budget.
On the date of publication, Rick Orford held long positions in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.