This is supposed to be the happiest time of year. But it is also the busiest – and most important – time of year for retail companies.
According to the National Retail Federation, about 20% of a retailer’s annual sales volume happens in November and December. For consumer discretionary stores like toy stores, jewelry stores, department stores, and electronics stores, that number stands north of 30%.
Essentially, this is make-or-break time for retailers. Crush it in November and December, and you’ve made it a great year. Miss the mark, however, and you’ll be in serious pain.
That’s why retail stocks are so volatile in the fourth quarter. A good holiday quarter could easily send a retail stock higher by 20%, 30%, or even more in a matter of weeks. A bad holiday quarter could have the opposite impact.
So, with the most important shopping weekend of the holiday period now in the rearview mirror (Black Friday-Cyber Monday), now is the time to dig through the data to discover which retailers are winning big this holiday season.
We’ve done just that – and we’ve come away with a few notable takeaways about the 2021 holiday shopping season that we believe serve as the basis for which retail stocks you should be buying right now. Those takeaways are as follows:
- It was a strong holiday shopping weekend. According to the latest data from Mastercard SpendingPulse, Black Friday-Cyber Monday weekend retail sales rose about 14% year-over-year. That’s stronger than was expected, and is indicative of a U.S. consumer that is ready to spend big after holding back on some purchases last year amid the pandemic.
- Online retail remained hot. Lots of folks expected brick-and-mortar sales to rebound strongly in 2021 at the expense of online sales. But that didn’t really happen. According to Sensormatic Solutions, Black Friday store traffic dropped 28% from 2019 levels, while Mastercard found that e-commerce sales over the holiday shopping weekend rose about 5% year-over-year, putting them up 29% over 2019 levels. Comparably, in-store retail sales rose just 2% from 2019 levels. Shopify also reported a very impressive 21% year-over-year increase in Black Friday sales, on top of a 75% surge last year.
- Department stores bounced back. Gordon Haskett found that department stores thrived on Black Friday, while data from Mastercard shows that spending at department stores rose about 19% year-over-year during the holiday shopping weekend. Our read-through on search interest trends for various department stores also showed promising year-over-year growth rates during the weekend.
- Everyone wanted to buy clothing. After not buying many clothes in holiday 2020, consumers are ready to restock their wardrobes this holiday season. Multiple firms highlighted clothing stores as being a bright-spot over the holiday weekend. Of note, a Gordon Haskett survey of Black Friday shoppers showed a sharp increase in the number of shoppers that made a purchase in the apparel category.
- People are proposing again. Unsurprisingly, now that weddings can actually take place, there is a sudden surge in demand for wedding rings and jewelry. According to Mastercard data, jewelry store spending is up an impressive 78% year-over-year so far this holiday shopping season.
- Gaming is front-and-center for consumers. According to data from Adobe Analytics, gaming consoles and hardware were top-sellers this past weekend, including the PS5, Switch, and Oculus headset.
- Sporting goods stores posted a strong showing. Multiple firms, including Bank of America and Adobe, highlighted sporting goods stores as benefitting from strong demand this holiday season. Our online channel checks corroborated this sentiment.
Considering these insights, we’ve tallied around 27 retail stocks that we think are already winning big this holiday season.
Those include major department store operators like Walmart (WMT), Target (TGT), Macy’s (M), and Nordstrom (JWN), as well as sporting goods stores like Dick’s Sporting Goods (DKS) and Big 5 Sporting Goods (BGFV). Our channel checks plus external data suggest those stores had a big holiday shopping weekend.
We’re also bullish on Lululemon (LULU), Adidas (ADDYY), and Nike (NKE), as it appears the athleisure trend is gaining momentum this holiday season. Crocs (CROX) are a notable standout, per our data, early on in the holiday season, too. In the apparel world, our data suggests Tilly’s (TLYS) and Express (EXPR) benefitted from strong demand this past weekend.
Outdoor apparel and goods were hot items this past weekend. We think the big winners there were Yeti (YETI) and Columbia Sportswear (COLM). Our channel checks also suggested strong demand for home improvement stores like Home Depot (HD) and Lowe’s (LOW).
In the online retail world, we think the biggest winner this past weekend was Shopify (SHOP) amid a shift towards buying from smaller retailers and merchants.
On the gaming front, we believe the big winners are Meta (FB), thanks to supercharged demand for its Oculus headset, as well as Roblox (RBLX), given that all those headset buyers will likely plug into the metaverse and Roblox has the most established metaverse today.
And, lastly, we continue to believe that resale and social platforms will have a big holiday season, with their big gains coming over the next few weeks as shoppers run into more and more “out of stock” messages. Our list of winners there includes Etsy (ETSY), Poshmark (POSH), ThredUp (TDUP), The RealReal (REAL), eBay (EBAY), Snap (SNAP), Pinterest (PINS), and Twitter (TWTR).
Now, let’s be clear on something: We think these 27 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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P.S. In order to best prepare for what 2022 will bring, Louis Navellier, Eric Fry, and myself are hosting a special event next Tuesday, December 7 at 7:00 p.m. EST. We’re calling it the Early Warning Summit, and it’s where we will reveal four stock picks that could soar in 2022. All three of us see major events rocking the markets in the next year, and these four stocks are the best stocks to own. Click here to save your spot.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.