It's going to be another lean holiday season this year for families across the U.S. Widespread unemployment and stringent credit policies are changing the meaning of Christmas. And budget-friendly presents are replacing the traditional elaborate gift giving traditions.

IN PICTURES: Eight Ways To Survive A Market Downturn

'Tis the Season to be Thrifty
In a typical year, bustling shoppers can be seen throughout malls and department stores, splurging on gifts for the ones they love. And the focal point of Christmas tends to be what lies beneath the tree.

This year however, shoppers are more likely to be found purchasing practical items that used to be bought as everyday items. A heightened emphasis will be spending time with the family, rather than gift they have to offer.

Bah, Humbug Stocks
The first socks that come to mind for investors capitalizing on the frugal spending patters are typically dollar based retailers like Family Dollar (NYSE:FDO) and discount behemoth Wal-Mart (NYSE:WMT). These companies will undoubtedly benefit from stingy consumers. However, there are three retailers that I have pegged to be the top winners this holidays season.

Costco (Nasdaq:COST): Many people do not even have the funds to purchase items they actually need anymore. The holidays will give them an opportunity to receive everyday goods. Costco's "treasure hunt" theme offers unique but practical gifts that make ideal presents that are often attractively priced. It's no surprise that memberships and customer visits were on the rise last quarter, as shoppers gear up for the start of the shopping season.

Amazon (Nasdaq:AMZN): The e-tailer often boasts rock-bottom prices, particularly on electronics, thanks to its unique business model that generates a negative cash conversion cycle. In a similar fashion to last year, families with a little extra spending money will likely make one large purchase, such as a gaming console or entertainment system, to please the entire family. Amazon is likely to be their outlet of choice, as consumers face few options to score deals on electronic gadgets aside from Best Buy (NYSE:BBY).

Aeropostale (NYSE:ARO): The teen retailer has literally emerged into a hotspot at malls across the country. In September, same store sales rose 19%, and year-to-date, total sales have skyrocketed 28%. It shouldn't come as much of a surprise though, as its stylish clothes mimic higher end brands like Abercrombie & Fitch (NYSE:ANF) for a fraction of the price. Fashion-conscious youngsters can expect to open a few Aeropostale-labeled boxes on Christmas morning.

The Bottom Line: A Twinkling Holiday Portfolio
This is not meant to be an all-encompassing list of retailers bound to benefit from the 2009 Christmas season. That said, these are three stellar companies that sport solid balance sheets, operate efficient business models and can capitalize on budget conscious shoppers. Investors seeking to trade in advance of the holidays can count on these retailers to light up their portfolios. (For more, check out Holiday Spending Or Spending Holiday?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  2. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  3. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  4. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  5. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  6. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  7. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  8. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  9. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  10. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
RELATED FAQS
  1. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  2. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  3. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  4. Can mutual funds invest in options and futures? (RYMBX, GATEX)

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  5. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  6. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center