It’s going to be a record holiday shopping season like none before it.
That’s the message being passed on to us from every major retail analytics firm in the world. The National Retail Federation, for example, is predicting that retail sales will rise about 10% year-over-year this holiday season – versus an average gain of about 4% over the past five years.
Adobe is calling for a 10% rise in e-commerce sales this holiday season to a new record – an impressive rise considering last year’s 33% surge.
Klarna’s 2021 holiday shopping survey found that more than a third of shoppers expect to spend more on gifts in 2021 than in 2020, while a Deloitte report found that holiday sales will rise a very impressive 8% this year, paced by particularly high spending among younger generations.
The big picture? It’s going to be a big holiday shopping season.
Pent-up demand is real. Interest rates are low. Savings rates are up. Consumer confidence is strong. You have exactly what you need for a surge in holiday spending.
So, as investors, we must ask the question: How do we play this surge? What are the top retail stocks to buy this holiday season?
At the top of my list are resale platforms, because of this little thing you’ve probably heard of called “supply chain challenges.” Ring a bell? Pretty much every retailer is talking about supply chain challenges these days. Well, it’s more than just talk. The prevalence of out-of-stock messages has risen a whopping 172% going into the holiday season, according to Adobe.
I don’t know about you, but I hate getting out-of-stock messages. So do most consumers.
That’s why most consumers this holiday season are going to shift to shopping platforms where such messages don’t exist: Resale platforms, like Etsy (NASDAQ:ETSY), Poshmark (NASDAQ:POSH), ThredUp (NASDAQ:TDUP), The RealReal (NASDAQ:REAL), and eBay (NASDAQ:EBAY). Shopify (NYSE:SHOP) and BigCommerce (NASDAQ:BIGC) could win big here, too, as they presumably power some resale platforms.
So, that’s the first big trend I’m focused on this holiday season. Resale. Resale. Resale.
The second is social shopping. Multiple surveys suggest that younger generations are poised to spend big this holiday season, maybe because they saved a ton of money during Covid by living at their parents, and/or because they made a ton of money by betting it all on Ethereum.
Either way, young people are going to spend a lot of money this holiday season.
Now, it’s very well-documented that these young folks like to shop online, and in particular, like to shop through social media channels. It looks like this holiday season will only accentuate that preference, as a McKinsey survey found that 87% of Gen Z shoppers will use social media for holiday shopping inspiration this year.
That’s why I’m bullish on social shopping platforms this holiday season – platforms like Snap (NYSE:SNAP), Pinterest (NYSE:PINS), Twitter (NYSE:TWTR), and Meta (NASDAQ:FB).
A third big retail trend to watch this holiday shopping is the metaverse. Some of the top toys this holiday season include AR-enhanced toys like the Tamagotchi Pix and Got2Glow Fairy Finder. Meanwhile, VR headsets have been so popular that they’re basically sold out everywhere now.
So, if you’re a big believer in the metaverse, now may be as good a time as any to buy Roblox (NASDAQ:RBLX) – since we see adoption and usage of the Roblox platform soaring this holiday season as general consumer awareness of the metaverse rises.
The fourth big retail trend I’m watching is the explosion of Buy Now, Pay Later services. These services have seen their usage soar in 2022, and most surveys indicate this surge will persist into the holiday season. One survey from PYMNTS, for example, found that BNPL usage is expected to nearly double this holiday season.
Some strong picks in the BNPL space include Affirm (NASDAQ:AFRM), PayPal (NASDAQ:PYPL), and Square (NASDAQ:SQ) – the last of which looks really attractive at current levels.
Other, smaller retail trends I’m following this holiday season include a surge in TV buying thanks to some pretty big price cuts over at Roku (NASDAQ:ROKU), the launch of the Switch OLED from Nintendo (OTCMKTS:NTDOY), the continued red-hot popularity of AirPods from Apple (NASDAQ:AAPL), and a renewed interest in buying experiences-as-a-gift in what could be a big tailwind for Live Nation (NYSE:LYV) and Expedia (NASDAQ:EXPE).
Now, let’s be clear on something: We think these 20 retail stocks represent good investment opportunities – but not the best investment opportunities.
That’s because the best investment opportunities don’t emerge out of a holiday shopping trend that may come and go; rather, they emerge out of a world-changing technological innovation that will evolve over the next several years, impact people’s personal and professional lives, and ultimately create a ton of economic value for shareholders.
The best investment opportunities, in short, are in early-stage tech disruptors.
Like this tiny, $3 stock that is behind what I believe to be the biggest technological breakthrough of our lifetimes: The creation of a forever battery that will allow EVs to drive for thousands of miles, your phone to hold a charge for weeks, and your home to run exclusively on clean energy.
It’s a technological breakthrough like no other – and an investment opportunity that could mint millionaires.
So, buy yourself a gift this holiday season, and for just $3, potentially buy yourself a ticket to financial independence.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.