These Black Friday Stocks are Trending Well – and Could Get Another Bump from the Holiday Shopping Season.
Black Friday sales have been trending downward in recent years. But coming off a strong October (+3.1% year-over-year growth), there’s reason for optimism about the U.S. retail sector this holiday season. For investors, that means there’s reason to consider investing in retail stocks.
The National Retail Federation (NRF), which, it should be said, does tend to overestimate, expects Americans to spend a record $730 billion this holiday season, beginning next week with Thanksgiving and Black Friday. If true, that would be about a 4% improvement over 2018 – better year-over-year improvement than usual. According to NRF data, holiday retail sales have improved by an average of 2.5% annually in the last 15 years, dragged down by major down shopping seasons during the 2008-09 recession.
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Of course, holiday retail sales have shifted increasingly online, resulting in huge numbers for Cyber Monday, which immediately follows the Thanksgiving weekend. Last year, Cyber Monday hit a record $7.9 billion, up 19% from the previous year. And that was after Black Friday pulled in $6.22 billion in e-commerce sales, on the heels of $3.7 billion spent online on Thanksgiving.
Last year, those numbers did little to boost retail stocks, as all stocks were in the throes of one of the worst holiday market corrections in history. But the retail sector has been trending much better of late; the S&P 500 Retail ETF (XRT) is up 18% in the last three months on the heels of a mid-August bottom. Meanwhile, the stock market as a whole is in a much better place, just down from all-time highs.
Which retail stocks have been trending well? Those are the “Black Friday stocks” worth buying.
So let’s focus on stocks with charts that are already trending in the right direction. Here are three retail stocks to buy before Black Friday (and Cyber Monday):
3 Retail Stocks to Buy for Black Friday
Black Friday Retail Stock #1: Amazon.com (AMZN)
This one’s a no-brainer. Amazon dominates Cyber Monday, as the e-commerce giant has expanded its discount deals from a day to a full week in recent years.
The stock is up close to 16% this year, but has been churning for three and a half months, stuck in a range between 1,705 and 1,843 since the beginning of August. Still, aside from last year, Amazon stock has a history of jumping around the holidays. In 2017, it was up 3.5% from Black Friday until the end of the year. In 2016, it was up 2%. Even last year wasn’t so bad – the stock was flat from Thanksgiving until New Years, at a time when the S&P 500 was down roughly 5%.
With AMZN trading at slightly depressed prices, buying right before the company’s busiest time of year makes sense.
Black Friday Retail Stock #2: Lululemon (LULU)
Lululemon has become one of the premiere apparel companies in the world, and its yoga gear has become a staple of the holiday shopping season. But the reasons for buying LULU stock are more specific: it’s having an incredible year, up 78% and currently at new highs and it reports earnings early next month, with analysts anticipating 24% earnings per share growth (the company has beaten estimates by an average of 7% the last four quarters).
Last year, Lululemon had so many early shoppers that the company’s website temporarily crashed on Thanksgiving. Here’s betting they’ve worked out the kinks in the last 52 weeks. A rare earnings disappointment next month could derail things. But right now, the chart looks pretty darn great:
Black Friday Retail Stock #3: Best Buy (BBY)
Counted out for dead years ago, this big-box electronics chain continues to hang in there. The company has grown sales in each of the last two years after three straight years of declines prior to that. It reports earnings next Tuesday, November 26 – two days before Thanksgiving; so you might want to wait and see how those shake out before buying BBY. But the stock looks good, up 45% this year and 18% in the last six weeks. And it’s still remarkably cheap given the run-up, trading at just 13 times trailing earnings.
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Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post has been updated from an original version, published in 2017.