The holiday shopping season officially kicks off on Black Friday and this year’s event is expected to yield big rewards for retailers. It’s estimated that consumer spending over the Black Friday weekend will increase by 47% over sales figures posted in 2016. For investors, the holiday shopping frenzy is a prime opportunity 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 throughout 2017, including Toys R Us, Rue21 and Payless. Retail sales notched $486.6 billion in October, up just 0.2% from September, which saw a jump of 1.9%. Looking ahead, these are the seven stocks that have the brightest outlook for Black Friday and beyond. (All data below are current as of end of business Nov. 21, 2017.)

1. Amazon

Amazon (AMZN) 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. The stock continues to outpace its retail competitors and it’s projected to claim a 34% share of online retail sales during the 2017 holiday season.

  • Average Volume: 2,470,000
  • Market Cap: $562.91 billion
  • P/E Ratio (TTM): 289.21
  • EPS (TTM): $3.94
  • Dividend and Yield: N/A

(See Why Amazon’s Stock Is Poised to Reach New Records.)

2. Wal-Mart

Wal-Mart (WMT) has launched an active campaign to keep pace with Amazon, introducing a streamlined return process and an online grocery shopping service. Second quarter earnings for 2017 beat expectations, as online sales climbed 60%. 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: 12,740,000
  • Market Cap: $291.59 billion
  • P/E Ratio (TTM): 25.67
  • EPS (TTM): $3.76
  • Dividend and Yield: $6.12 (6.34%)

3. Best Buy

Best Buy (BBY) has seen revenues shrink and profits climb, a formula that may work in investors’ favor over the holidays. The stock has performed well overall in 2017, peaking at $62.47 per share at the end of August. September saw valuations fall but Best Buy has been steadily regaining ground, setting the stage for a strong finish by year’s end.

  • Average Volume: 3,200,000
  • Market Cap: $17.42 billion
  • P/E Ratio (TTM): 14.17
  • EPS (TTM): $3.96
  • Dividend and Yield: $1.36 (2.36%)

4. Dick’s Sporting Goods

Dick’s Sporting Goods (DKS) 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. Ahead of Black Friday, the sporting goods retailer reported year-over-year revenue increases for the third quarter, with an expectation that the company’s stock would surpass Wall Street’s earnings per share estimate for the year.

  • Average Volume: 3,170,000
  • Market Cap: $3.02 billion
  • P/E Ratio (TTM): 10.55
  • EPS (TTM): $2.71
  • Dividend and Yield: $0.68 (2.28%)

(See Sports Retail Stocks Jump After Upbeat Reports.)

5. Target

Target (TGT) is a staple of Black Friday and the holiday shopping season, and it’s actively investing millions in revamping its stores and online presence. Despite stock prices seeing a sharp drop of 9.2% after posting its third quarter earnings report, the retailer is confidently predicting strong holiday sales. Revenue exceeded forecasts, increasing by $16.4 billion over last year’s third quarter, making it one to watch carefully for investors. 

  • Average Volume: 6,320,000
  • Market Cap: $31.60 billion
  • P/E Ratio (TTM): 11.98
  • EPS (TTM): $4.78 
  • Dividend and Yield: $2.48 (4.33%)

6. JC Penney

JC Penney (JCP) has been through some significant ups and downs, but its stock saw share prices soar by nearly 34% in the first week of November. The question for investors is whether it can maintain that kind of momentum throughout the holidays. If you’re looking for a bargain buy, however, this stock fits the bill.

  • Average Volume: 12,200,000
  • Market Cap: $1.00 billion
  • P/E Ratio (TTM): N/A
  • EPS (TTM): $-0.58
  • Dividend and Yield: N/A​

(See JC Penney Surprises with Solid Comp Sales.)

7. Big Lots

Big Lots (BIG) doesn’t get as much attention as other big-name retailers, making it the potential dark horse of the holiday shopping season. The company’s stock has been on a roll of late, with shares up over 7% in the past three months. That kind of growth could make it the discount retailer to watching on Black Friday.

  • Average Volume: 728,110
  • Market Cap: $2.39 billion
  • P/E Ratio (TTM): 14.27
  • EPS (TTM): $3.84
  • Dividend and Yield: $1.00 (1.83%)

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.

 

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