Saturday, December 9, 2023

4 Stocks to Boost Your Portfolio Ahead of the Holiday Season

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The holiday season is about to start, and all eyes are on retail sales. The holiday season has traditionally served as a major shopping window for retailers, and expectations are high this time, too, despite inflationary pressures.

Also, e-commerce, which has been playing a key role in driving holiday retail sales over the past few years, will continue to play its part. Given this situation, investing in retail stocks like, Inc. (AMZN Free Report) , Wayfair Inc. (W Free Report) , Travelzoo (TZOO Free Report) and Ross Stores (ROSS Free Report) , each with a strong online arm, would be a prudent choice.

Holiday Sales to Grow

Holiday sales are expected to jump 3-4% year over year in 2023 in the range of $957.3 billion to $966.6 billion, according to the latest report from the National Retail Federation (NRF).

Although the growth is slightly slower than in the past three years, when trillions of dollars in stimulus saw retail sales hitting new record highs, this year’s projected figures are impressive given the ongoing inflationary pressures amid soaring interest rates.

However, the NRF has said that this year’s holiday sales growth will return to the pre-pandemic levels.

Also, this year’s holiday spending aligns with the typical yearly holiday growth observed between 2010 and 2019, averaging a 3.6% increase.

Online shopping has been the mainstay of retail sales, which has been a significant change in consumer behavior resulting from the Covid-19 pandemic.

Sales from online and other non-store channels are projected to grow by 7% to 9%, reaching a total of $273.7 billion to $278.8 billion, a significant jump from the previous year’s figure of $255.8 billion.

Sky-high prices have compelled people to spend cautiously over the past year but the retail sector has shown resilience as sales have been on the rise owning to higher demand and spending.

Retail sales declined 0.1% month over month in October for the first time in seven months. However, experts believe that consumers have been saving lately to spend more during the holiday season.

Also, expectations are high that the Federal Reserve, which increased interest rates by 525 basis points since March 2022 to take its benchmark interest rates in the range of 5.25-5.5%, may soon end its monetary tightening campaign after it left interest rates unchanged in its last two FOMC meetings as inflation continues to ease.

Our Choices

Given this situation, it would be ideal to invest in retail stocks with a strong online arm. We’ve identified four such retail stocks that carry a Zacks Rank of #1 (Strong Buy) or 2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here., Inc. is one of the largest e-commerce providers, with sprawling operations in North America and across the globe. AMZN’s online retail business revolves around the Prime program, well supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish its footprint in the physical grocery supermarket space.’sexpected earnings growth rate for the current year is 276.1%. The Zacks Consensus Estimate for current-year earnings has improved 14.6% over the past 60 days. AMZN presently carries a Zacks Rank #2.

Wayfair Inc. is one of the world’s leading online sellers of home goods products, consisting of furniture and home decor. W operates worldwide through and four other branded websites, namely, Joss & Main, AllModern, Birch Lane and Perigold. The company currently offers more than 40 million products from more than 20,000 suppliers.

Wayfair’s expected earnings growth rate for the current year is 83.5%. The Zacks Consensus Estimate for current-year earnings has improved 24.9% over the past 60 days. W presently has a Zacks Rank #2.

Travelzoo is an internet media company. TZOO engages in the provision of information to subscribers and website users about travel, entertainment and local deals available from companies. Travelzoo’soperating segment consists of Asia Pacific, Europe and North America.

Travelzoo’s expected earnings growth rate for the current year is 50.9%. The Zacks Consensus Estimate for current-year earnings has improved 11.1% over the past 60 days. TZOO currently carries a Zacks Rank #2.

Ross Stores operates as an off-price retailer of apparel and home accessories, primarily in the United States. ROST operates its stores under the Ross Dress for Less (Ross) and dd’s DISCOUNTS names. Ross Stores primarily offers in-season, branded and designer apparel, footwear, accessories, and other home-related merchandise for everyone in the family.

Ross Stores’ expected earnings growth rate for the current year is 21.7%. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the past 60 days. ROST presently carries a Zacks Rank #2.

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