Credit: Shutterstock photoAs Americans snapped up bargains on toys and electronics through their phones, Cyber Monday (Nov 27) has probably seen the highest shopping. Traditional brick-and-mortar companies also started the holiday season on a firm note and have stepped up their online efforts to spur sales. They have substantially improved their websites and delivery process, which stood them in good stead.
The U.S. economy, moreover, expanded at an encouraging pace while consumer confidence rose in recent times, which will provide the much-needed impetus to retailers this year. Thus, it's time to invest in some solid retail stocks that are likely to make the most of the bullish sentiments.
Cyber Monday Sales Likely to Hit $6.6 Billion
As consumers made their way back to office on Cyber Monday after a long weekend, many resorted to online shopping. Online sales were on track to cross the $6.6 billion mark by the end of the day, as per Adobe Insights. Such a projection represented a rise of 16.8% from the same period last year. In fact, as of 7 am Pacific Time (PT), $840 million had been spent on shopping online, up 16.9% from last year.
Lest we forget, around $5.03 billion was spent online on Black Friday (Nov 24), reflecting an uptick of 17% from last year. Small Business Saturday and Sunday (Nov 25 & 26) also recorded combined online sales of 5.12 billion, up 10% from the year-ago levels. Thanksgiving Day (Nov 23) also saw an 18.3% increase in online shopping from 2016's $1.3 billion.
But why just these special days? From Nov 1 to Nov 24, online shopping revenues climbed to $38.3 billion. That's a year-over-year jump of 17.8%. Mostly, toys, handheld electronics and apparel merchandise were sold, with the top selling items being Nintendo Switch, Hatchimals, L.O.L. Surprise and ride-on cars for kids. Meanwhile, e-commerce giant Amazon.com, Inc. AMZN raked in the highest sales.
Amazon: A Clear Winner
This Black Friday weekend, Amazon's desktop conversion rate rose nearly 23% and site visits were up 50% compared to other Black Friday weekend holidays, according to a research by SimilarWeb insights emailed to Retail Dive.
In a bid to drive sales, Amazon launched a 'Watch a Deal' app and linked its promotions to Alexa smart assistant as per Ricardo Rubi, partner at consulting firm Simon-Kucher.
Thanks to promising Black Friday sales, Amazon CEO Jeff Bezos' net worth skyrocketed to more than $100 billion. He is now the world's wealthiest man followed by Bill Gates and Warren Buffet, and owns about 78.9 million shares of the company.
Brick-and-Mortar Did Enough, Walmart Made Smart Moves
Brick-and-mortar retailers worked hard to attract shoppers this holiday weekend. They came up with in-person deals to counter the ease of shopping by mobile phone on Amazon. Even though national statistics showed a nominal drop in customer traffic at many locations during this period compared to last year, brick-and-mortar retailers' simplified promotional tactics helped boost sales and profit margins.
Wal-Mart Stores Inc WMT , in particular, helped shoppers navigate their locations easily through color-coded maps. They also made headway with their e-commerce sites, posing a threat to Amazon's online dominance. In the digital front, 68.5% purchased items at Amazon, while 57% of consumers bought from Wal-Mart Stores.
Santa Claus Rally to Visit Early This Year
Retailers are, in the meanwhile, poised to benefit immensely from a Santa Claus rally. Many analysts and commentators have been using the term to refer to the period from the beginning of December, or even as early as Black Friday, to Christmas. And this time around, markets have started to do well on steady economic growth and, there you have it, a Santa Claus rally.
Consumers have also shown confidence in their financial future and are willing to spend more, which usually triggers a Santa Claus rally. Personal income increased by $66.9 billion, or 0.4%, in September, while disposable personal income rose by $73.6 billion, or 2.1%, in the third quarter, according to the Bureau of Economic Analysis.
5 Retail Stocks to Ride the Holiday Shopping Rush
Taking the bullish holiday sales trend in to account, retailers are undoubtedly set to witness a strong year-end rally. Hence, it will be prudent to invest in five of the best retail stocks for handsome returns. Such stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Groupon, Inc.GRPN - a Zacks Rank #1 company - operates online local commerce marketplaces. The Zacks Consensus Estimate for current-year earnings rose 8.3% over the last 30 days. The company's expected growth rate for the current year is 229.6%, way higher than the industry 's projected gain of 7.6%. The company's earnings are set to grow 49.7% in 2018.
EVINE Live Inc.EVLV operates as a multiplatform video commerce company in the United States. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for current-year earnings increased in the last 30 days. Meanwhile, EVINE Live's projected growth rate for the current year is 104.8%, much higher than the industry's 7.6%. The stock's earnings are likely to grow more than 100% next year.
Wal-Mart Stores operates retail stores in various formats worldwide. It operates through three segments: Walmart U.S., Walmart International and Sams Club. Wal-Mart has a Zacks Rank #2. The Zacks Consensus Estimate for current-year earnings inched up 0.9% over the last 30 days. Wal-Mart's expected growth rate for the current year is 2.4%, in contrast to the industry 's projected decline of 4.3%. The company's earnings are likely to grow 5.8% in 2018. You can see the complete list of today's Zacks #1 Rank stocks here.
Burlington Stores, Inc.BURL operates as a retailer of branded apparel products in the United States. The company has a Zacks Rank #2. The Zacks Consensus Estimate for current-year earnings rose 1.9% in the last 30 days. Burlington Stores' expected growth rate for the current year is 31.8%, higher than the industry 's estimated rally of 15.6%. The company's earnings are likely to grow 13.9% in 2018.
Boot Barn Holdings, Inc.BOOT is a lifestyle retail chain that operates specialty retail stores in the United States. The stock has a Zack Rank #2. The Zacks Consensus Estimate for current-year earnings rose 7% over the last 30 days. Boot Barn's expected growth rate for the current year is 10.6%, in contrast to the industry 's projected decline of 4.2%. The company's earnings are expected to grow 20.4% next year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Groupon, Inc. (GRPN): Free Stock Analysis Report
EVINE Live Inc. (EVLV): Free Stock Analysis Report
Wal-Mart Stores, Inc. (WMT): Free Stock Analysis Report
Burlington Stores, Inc. (BURL): Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
