The holiday shopping season officially kicks off on Black Friday and the event is expected to yield big rewards for retailers. Many shoppers end up camping out in front of stores and in parking lots to take advantage of deep discounts offered by retailers, who hope that sales will be so high that their profits will end up in the black. While the day is a boon for deal-hungry shoppers, the holiday shopping frenzy is also a prime opportunity for investors to shore up their retail stock holdings.
Retail Stocks: The Black Friday Standouts
A strong holiday sales forecast could prove to be the ultimate gift for a retail sector that’s experienced a bumpy year. Numerous bankruptcy filings have plagued retailers recently, including Toys R Us, Rue21 and Payless. Retail sales have been steadily rising since 2000, according to the Federal Reserve Bank of St. Louis. So, investors may want to consider some of the market's top trending retail stocks. These are the seven stocks that have the brightest outlook for Black Friday and beyond. All data below are current as of mid-day Nov. 8, 2018.
Amazon isn’t a cheap buy compared to some of the other stocks included here, but it’s still a contender for Black Friday investing. After making an astronomical climb through the retail ranks, Amazon has emerged as the dominant force in online shopping. (Read more about why Amazon's stock is poised to reach new records.) The stock continues to outpace its retail competitors.
- Average volume: 6,018,463
- Market cap: $838.364 billion
- P/E ratio (TTM): 135.78
- EPS (TTM): $12.63
- Dividend and yield: N/A
Wal-Mart has launched an active campaign to keep pace with Amazon, introducing a streamlined return process, an online grocery shopping service, and competitive free shipping on qualified orders. With 51% of holiday shoppers focusing their budget on online shopping, Wal-Mart may see a huge payoff from expanding its online presence this Black Friday.
- Average volume: 8,670,147
- Market cap: $309.01 billion
- P/E ratio (TTM): 60.36
- EPS (TTM): $1.75
- Dividend and yield: $2.08 (2.05%)
While some retailers drop hints to shoppers about what they'll be offering during their Black Friday deals, Best Buy is looking at a different strategy. The retailer recently kicked off its Black Friday sales early, advertising sale prices on certain big-ticket items at the beginning of November. That may be a good strategy, as the company looks to cut costs, optimize brick-and-mortar square footage, boost online sales and stabilize its revenue stream.
- Average volume: 3,455,492
- Market cap: $19.458 billion
- P/E ratio (TTM): 19.70
- EPS (TTM): $3.598
- Dividend and yield: $1.80 (2.50%)
Dick’s Sporting Goods
Dick’s Sporting Goods can best be described as a survivor in the retail sector. While competitors like Sports Authority and Sports Chalet have folded, Dick’s has continued to grow slowly but steadily, while generating a solid profit in the process. (Read more about how sports retail stocks jumped after upbeat reports.) The retailer is among several that have pledged to start its Black Friday deals early, opening up its doors to shoppers on Thanksgiving.
- Average volume: 3,054,052
- Market cap: $3.778 billion
- P/E ratio (TTM): 11.57
- EPS (TTM): $3.23
- Dividend and yield: $0.90 (2.47%)
Target is a staple of Black Friday and the holiday shopping season, and it’s actively investing millions in revamping its stores and online presence. Wal-Mart is considered the retailer's biggest competitor. Each year, the two go to bat against each other trying to entice shoppers in with big deals, with each trying to be the first to release their Black Friday ads.
- Average volume: 4,707,700
- Market cap: $45.75 billion
- P/E ratio (TTM): 15.23
- EPS (TTM): $5.71
- Dividend and yield: $2.56 (3.03%)
JC Penney has been losing steam, with the stock continuing a downward slide since 2013. The retailer has shuttered some of its lower performing stores as well as some fulfillment centers in order to cut down costs. But with a new CEO taking the helm as of October 2018, the company is banking on turning things around. (Read more about JC Penney's solid comp sales.) If you’re looking for a bargain buy, however, this stock fits the bill.
- Average volume: 15,283,021
- Market cap: $432.85 billion
- P/E ratio (TTM): N/A
- EPS (TTM): $-0.19
- Dividend and yield: N/A
Big Lots doesn’t get as much attention as other big-name retailers, making it the potential dark horse of the holiday shopping season. The company, which announced a new CEO in September 2018, relies heavily on one segment: retail closeout. Although growth has been stagnant, it is still a retailer to watching on Black Friday.
- Average volume: 1,282,283
- Market cap: $1.745 billion
- P/E ratio (TTM): 11.08
- EPS (TTM): $3.90
- Dividend and yield: $1.20 (2.79%)
The Bottom Line
A solid holiday shopping season may be a boon for retailers and for investors who know where the deals are to be found. Comparing your retail stock options and understanding the risks can help you decide which investments should be added to your "nice" list this year.