The holiday shopping season is just around the corner and our retail stocks are well-positioned to thrive, according to Wall Street research firm Telsey Advisory Group. The News In a note to clients this week, the retail-focused company named Amazon, Costco, Best Buy and TJX Companies as the companies best positioned compared to their peers this holiday season. Telsey Advisory expects the pursuit of value to be a key theme among buyers this year, putting companies known for their good deals on solid footing. Overall, the company expects holiday retail sales to rise between 3% and 3.5% this year, compared to 4.6% growth last year and a 5.4% increase in 2022. Analysts identified the top -Offers by retail sector, from online to specialty clothing and so on. The company has a Buy-equivalent-Outperform rating on all four Club stocks. Amazon is Telsey Advisory's top choice among online retailers because consumers prefer a more convenient shopping experience through Prime membership. In general, analysts see direct-to-consumer sales as a bright spot this holiday season, driven by a wide selection of products that are competitively priced and delivered increasingly quickly. “Amazon should continue to lead the race,” analysts wrote, noting that its October discount for Prime members helped bring in early holiday shopping dollars. Although Telsey Advisory's note was released Thursday evening ahead of Amazon's earnings report, the company's forecasts for the quarter confirmed analysts' optimism. Analysts named Costco one of their two favorites in the discount and warehouse club category (Walmart is the other). The company is bullish on warehouse clubs overall, forecasting holiday sales growth of 7%, up from 5.5% in the same period last year, “driven primarily by a defensive product mix of consumer staples and value-oriented necessities, which should attract consumers on a tight budget.” .” Costco has had a good year so far, and that's likely to continue in the final months of 2024, Telsey Advisory argued. Telsey Advisory said Best Buy will stand out in the hardlines category, which includes items like electronics, appliances and furniture Analysts expect consumer electronics sales to decline 3% in 2024 compared to last year, but that's actually an improvement from last year's 7.9% decline as demand accelerates during the year Above all, the company argues that Best Buy has reached its lowest point thanks to offering the “full range of the latest technology products”, such as: B. new AI-powered laptops, and its strength in e-commerce, is poised to gain market share in electronics retail. While Best Buy's same-store sales are expected to be roughly flat, Telsey Advisory expects to stabilize as the replacement cycle for pandemic-era purchases takes shape. TJX Companies is the company's off-price retailer of choice as consumers from all income levels switch to cheaper goods the company offers. TJ Maxx parent company's value-driven family and home offering in non-mall locations helps position the company to deliver consistent earnings growth, Telsey Advisory said. Overall, analysts expect off-price retail to gain a share of consumer spending this holiday season. Big picture Telsey Advisory's selection of these four club stocks as preferred names this holiday season reflects their competitiveness in their respective categories. This is particularly important at a time when consumers are grappling with a range of economic challenges that impact their ability to spend. “The savings rate has fallen, consumers have moderated their spending habits and there is still some degree of inflation,” the company's founder, Dana Telsey, said in an interview with CNBC. She added that as wages have risen, the daily cost of living has increased, making consumers “more thoughtful and discerning” when it comes to Christmas shopping. In fact, the National Retail Federation predicted that holiday spending growth in 2024 will be the slowest in six years. The company's forecast holiday sales – defined as occurring in November and December – will rise between 2.5% and 3.5% year-on-year, which is similar to Telsey Advisory's own forecast. One reason for this is that there are five fewer shopping days between Thanksgiving and Christmas this year. Another reason is the possible impact of hurricanes Helene and Milton and the US presidential election. Conclusion As shoppers become more selective, retail investors must do the same. We tried to do that with our investments in Amazon, Costco, Best Buy and TJX. The value of Amazon Prime and Costco memberships, Best Buy's differentiated product mix, and TJX's assortment of high-value merchandise at deep discounts should appeal to shoppers as their appetite for consumer goods is tempered and the need for everyday essentials remains. Sure, we sold Best Buy on Tuesday to book some gains ahead of earnings later in November, but there's no change to our long-term thesis, which is based on the PC renewal cycle and lower interest rates driving purchases of home appliances like appliances and television. Meanwhile, Amazon's quarterly Thursday showed how important the company is to its future portfolio. There have been some questions on Wall Street about Costco's valuation lately, but the company has plenty of growth levers, including international expansion and new technology initiatives. While TJX stock has declined somewhat in recent weeks, the reasons to own the company – particularly off-price market share gains, as Telsey Advisory expects this holiday season – remain intact. (Jim Cramer's Charitable Trust is long AMZN, COST, BBY, TJX. A full list of stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation's portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. 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The holiday shopping season is just around the corner and our retail stocks are well-positioned to thrive, according to Wall Street research firm Telsey Advisory Group.
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