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E-Commerce to Boost Holiday Season Retail Sales: 5 Winners

The U.S. holiday season officially kicked off on Black Friday and retailers are expecting sales to get a boost as people go on a shopping spree over the next five weeks. Although the holiday season, over the past few years, has been starting as early as Nov 1, shopping gathers momentum only from Thanksgiving.

This year also seems to be no different, with initial reports claiming a great start to the shopping bonanza. However, the entire shopping ballgame has changed over the past few years owing to the growing dominance of e-commerce. This year, too, e-commerce is expected to be the main sales driver.

Given this situation, investing in retail stocks like Amazon.com, Inc. AMZN, Travelzoo TZOO, Wayfair Inc. W, Tripadvisor, Inc. TRIP and Target Corporation TGT with a strong online presence would be a wise decision.

E-Commerce to Drive Holiday Season Sales

According to the latest Mastercard SpendingPulse, Black Friday sales are up 2.5% year over year, with e-commerce giving overall sales a major boost. The report says that e-commerce sales rose a solid 8.5% year over year as customers avoided crowds.

A number of sporting events were also aired on Black Friday, which further drove e-commerce sales as online shopping became a great option for the viewers. Shopping on mobile totaled $5.3 billion.

Adobe Analytics also reported an 8.5% jump in online spending on Black Friday, totaling $9.8 billion.

A separate Mastercard SpendingPulse report released earlier projected overall holiday season retail sales to grow 3.7% year over year between Nov 1 and Dec 24. E-commerce sales and online sales were projected to jump a solid 6.7% and 2.9%, respectively.

According to a Bain & Company report, retail sales are projected to grow 3%, reaching nearly $915 billion, year over year, during the holiday season in November and December. E-commerce and mail orders are projected to contribute 90% of the overall sales during this period.

The National Retail Federation (NRF) is also optimistic about an impressive holiday season despite the ongoing inflationary pressures. The NRF projects retail sales to jump 3-4% year over year this holiday season, hitting $957.3 billion to $966.6 billion.

E-commerce has changed the entire shopping ball game. The trend picked up further during the peak of the pandemic when millions shopped online on fears of contracting the COVID-19 virus.

Since then, people have realized the ease and comfort of shopping online, which has now become a norm.

Our Choices

Given the solid projection for retail sales during the holiday season and the growing dominance of e-commerce, it would thus be ideal to invest in retail stocks with a solid online presence.

We've identified five 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.

Amazon.com, 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, which is 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.

Amazon.com’sexpected earnings growth rate for the current year is 276.1%. The Zacks Consensus Estimate for current-year earnings has improved 19.7% over the past 60 days. AMZN presently carries 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.

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 Wayfair.com 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 84.1%. The Zacks Consensus Estimate for current-year earnings has improved 27.2% over the past 60 days. W presently has a Zacks Rank #2.

Tripadvisor, Inc. is one of the largest online travel research companies in the world. TRIP provides a platform for users to share reviews, ratings and opinions on hotels, destinations, attractions and restaurants. Tripadvisor also facilitates bookings between hotel suppliers and consumers using its web portals.

Tripadvisor’s expected earnings growth rate for the current year is 48%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. TRIP currently has a Zacks Rank #2.

Target Corporation has evolved from just being a pure brick-&-mortar retailer to an omni-channel entity. TGT has been making investments in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players. Target Corporation provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids.

Target Corporation’s expected earnings growth rate for the current year is 38.5%. The Zacks Consensus Estimate for current-year earnings has improved 9.9% over the past 60 days. TGT has a Zacks Rank #2.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Target Corporation (TGT) : Free Stock Analysis Report

TripAdvisor, Inc. (TRIP) : Free Stock Analysis Report

Wayfair Inc. (W) : Free Stock Analysis Report

Travelzoo (TZOO) : Free Stock Analysis Report

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Zacks Investment Research