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E-commerce to Boost Holiday Sales: 5 Solid Stocks to Buy

The holiday season is approaching but retailers continue to fret as there are no signs of coronavirus cases subsiding. Retail sales have been increasing somewhat over the past few months, but are still way behind the year-ago level. However, the good sign is that economies are reopening and people have once again started visiting physical stores.

According to App Annie, a mobile data and analytics company, this year is predicted to witness the biggest Q4 holiday shopping season on mobile yet. Despite low morale and millions of job losses, the retail sector has bounced back, thanks to e-commerce sales.

Consumers to Spend Record Hours Shopping on Mobile

According to App Annie, nearly 1 billion hours are likely to be spent on Android devices in the United States this holiday season, up 50% year over year. Driven by the need for essentials while maintaining home lockdowns, mobile e-commerce boomed in the first half of 2020.

The report also mentions that e-commerce will continue to see growth on mobile phones in the fourth quarter with a longer shopping season due to October’s Prime Day. Also, with the contraction in U.S. economy, consumers will seek deals and promotions for the holidays on their mobile devices.

According to Deloitte, holiday e-commerce sales are forecast to surge 25% to 35%, amounting to between $182 billion and $196 billion. In 2019, year-over-year online growth was of 14.7%, with sales reaching $145 billion. However, this means that retailers could start feeling the pressure to prepare for an onslaught of online orders, which could start as early as next month and run until last-minute shipping deadlines arrive.

Retailers Go on Hiring Spree

Retailers have already started hiring ahead of the holiday season to manage the rush and make on-time delivery. Walmart, Inc. WMT said last week that it will be hiring 20,000 seasonal staff members to prepare for an expected surge in online shopping ahead of the holidays in the United States. This will be Walmart's first large seasonal hiring in five years.

Also, Best Buy, Inc. BBY is looking to hire thousands of new employees. Starting this week, individual stores will be holding job fairs to start the process of hiring for the holiday season.

This definitely is an indication that retailers are hopeful of a much-needed boost in the holiday season.

Our Choices

However, much of this year’s holiday shopping will be done online until there is a definite treatment or vaccine for coronavirus. Given this scenario, it will be wise to invest in retail stocks with a strong online presence.

JD.com, Inc. JD through its website www.jd.com and mobile applications offers a selection of authentic products. It offers a wide array of products starting from computers, mobile handsets and other digital products, to home appliances, automobile accessories, clothing and shoes, luxury goods, personal care and other items.

The company’s expected earnings growth rate for the current year is 45.2%. The Zacks Consensus Estimate for current-year earnings has improved 20.8% over the past 60 days. JD.com sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation TGT has evolved from just being a pure brick and mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing its supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.

The company’s expected earnings growth rate for the current year is 11.9%. The Zacks Consensus Estimate for current-year earnings has improved 47.6% over the past 60 days. Target sports a Zacks Rank #1.

Walmart Inc. has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. In this regard, acquisitions of Bonobos, Moosejaw and Parcel, partnership with JD.com and Lord and Taylor, and investment in the online e-commerce platform Flipkart are noteworthy.

The company’s expected earnings growth rate for the current year is 8.5%. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the past 60 days. Walmart has a Zacks Rank #2 (Buy).

The Kroger Co. KR operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce, and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.

The company’s expected earnings growth rate for the current year is 46.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 60 days. Kroger has a Zacks Rank #2.

Best Buy Co., Inc. is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services.

The company’s expected earnings growth rate for the current year is 17.3%. The Zacks Consensus Estimate for current-year earnings has improved 26% over the past 60 days. Best Buy presently carries a Zacks Rank #2.

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Click to get this free report Target Corporation (TGT) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report Best Buy Co., Inc. (BBY) : Free Stock Analysis Report The Kroger Co. (KR) : Free Stock Analysis Report JD.com, Inc. (JD) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research