Four Retail Stocks for the Holidays

Well, we’ve zipped through the first weekend in this year’s Holiday shopping season, and retailers are pretty happy so far.

Black Friday’s sales were up about 8.3% from the year ago period, hitting roughly $10 billion on Friday alone.

The second major milestone we have coming up is for the online retailers. What has affectionately become known as “Cyber Monday” kicked off yesterday, and is expected to show some robust growth for the e-tailers, as well. So while investors could go ahead and place their bets on retail stocks – off and online – my feeling is we’re in the middle of a dramatic shift in how consumers spend their money.

While many folks still really enjoy running into crowded stores, fighting over the last Nintendo Wii on the shelf and heading home in traffic, there are plenty of people who are finding it more convenient to shop from the comfort of their living rooms. That means these folks are going to be shifting a lot of their holiday spending dollars from offline to online outlets.

How much of their wallets will be diverted online?

20%? 40%? 60%?

It’s tough to call, but this writer predicts that the number will increase as the online shopping experience becomes more like the offline experience. Sites like Zappos.com, where exchanges and returns are free, are a perfect example of how an online retailer can aggressively compete with its offline brethren.

So, as we begin to see e-tailer sales numbers come in after today’s kick-off, I’d be keeping my eye on the following stocks:

Amazon.com (Nasdaq: AMZN) – Here’s the granddaddy of online retailers – the Wal-Mart (WMT) of the web if you will – and now they’re even getting into the electronic book and music business, so it’ll be fun to see how this affects this company’s top and bottom line numbers this season.

Dell (Nasdaq: DELL) – Dell has lost a bit of its luster over the last two years in the wake of declining product quality and customer service debacles. Let’s see if a snazzy new ad campaign and the return of the company’s founder, Michael Dell, can turn this company into a rising star for the holidays again.

Apple (Nasdaq: AAPL) – While Apple isn’t strictly an “e-tailer” in the traditional sense of the word, an increasing amount of this company’s sales and earnings are coming from internet-enabled products such as the iPod and the iPhone. Those two products in particular are sure to make Apple a hit for this year’s shopping crowd.

eBay (Nasdaq: EBAY) – For the online bargain hunters out there, eBay is still likely to be the standard for finding great deals or hard-to-find products on the web. For those who still haven’t made the leap into online auctions, let me relate a personal story.

My aunt called me yesterday and said she couldn’t find a single Nintendo (NTDOY.PK) Wii for my younger cousins this Christmas – it was sold out at every store in her town. So I told her to jump on eBay and poke around for a bit. Within 10 minutes she found a brand new Wii, and a Christmas crisis had been averted.

So, needless to say, I’ll certainly be watching how this company fares this season.

I hope you save yourself some time and money by using some of the sites I’ve mentioned. And my real hope is that they turn into potential profits for you in the market, as well.

If you have any suggestions for retail (online or offline) stocks that others might want to watch this holiday shopping season, please mention them in the comments section on the web site. I’d love to hear what everyone is “buying” this year.

Happy holiday hunting my friend!

Comments

[singndoug]

H.H. Gregg (HGG) is an exciting play. Flat-screen TVs will be big this Christmas, and this electronics retailer sells a lot of them. This mid-summer IPO is down due to the market's downturn, recently raised 2008 guidance, and is generally regarded as a BUY by analysts. Expansion from 79 stores in the midwest and south to 400 stores in the next 10 years makes me want to get in on the ground floor. All of this adds up to a BUY for me.

[smithhonda]

Wayne -- I THINK TIF, COH and SKS wil also see increases sale the xmas