The holiday season is upon us, and with it comes the potential for strong retail sales. Despite recent economic data indicating solid fundamentals, the Federal Reserve has chosen to maintain high lending rates. However, this has not dampened the U.S. economy, which experienced a remarkable 4.9% growth in the third quarter of 2023. As a result, holiday retail sales are expected to remain robust, with e-commerce and online sales projected to grow by 6.7% and 2.9%, respectively.
The Outlook for Holiday Retail Sales
According to estimates from Mastercard SpendingPulse, holiday retail sales (excluding automotive) are expected to increase by 3.7% compared to the previous year. Research firm Deloitte forecasts total holiday retail sales in the range of $1.54 trillion to $1.56 trillion, marking a year-over-year improvement of 3.5% to 4.6%. Within these figures, e-commerce sales are projected to account for $278 billion to $284 billion, reflecting a significant increase of 10.3% to 12.8%. Online sales are also expected to grow by 4.8% year over year during the 2023 holiday season, according to Reuters. Additionally, Bain & Company anticipates nominal U.S. retail sales to grow by 3% in November and December, reaching nearly $915 billion, with most of the growth driven by non-store (e-commerce and mail-order) sales.
Five Wholesalers for Holiday Investing
We have identified five heavyweight U.S. wholesale retailers that present strong investment opportunities for the rest of 2023. These stocks have seen positive earnings estimate revisions in the last 60 days and hold a Zacks Rank #2 (Buy). Let’s take a closer look at each of them:
1. Walmart Inc. (WMT)
Walmart has benefited from its robust omnichannel operations and its focus on enhancing in-store and online experiences. The company has experienced increased market share in grocery and strong global comps growth. Walmart has an expected revenue and earnings growth rate of 95% and 2.4%, respectively, for the current fiscal year.
2. The TJX Companies Inc. (TJX)
TJX is known for its solid store and e-commerce growth efforts. Its off-price business model, strategic store locations, impressive brands, and fashion products have been key contributors to its success. TJX has an expected revenue and earnings growth rate of 17.5% and 19.6%, respectively, for the current fiscal year.
3. Costco Wholesale Corp. (COST)
Costco has been thriving in the market due to its strategic investments, a customer-centric approach, and emphasis on membership growth. The company has consistently delivered impressive sales and earnings numbers, and it is expected to continue its growth trajectory with a 5.6% increase in adjusted earnings per share for fiscal 2024.
4. Deckers Outdoor Corp. (DECK)
Deckers Outdoor has been capitalizing on the strength of its UGG and HOKA brands. The company has experienced solid gains in its global wholesale business, driven by robust consumer demand. Deckers Outdoor expects a net sales increase of 11% for fiscal 2024.
5. Ross Stores Inc. (ROST)
Ross Stores has been winning over customers with its improved merchandise and strong value offerings. The company’s expansion plans have been successful, and its off-price retail stores continue to attract value-conscious customers. Ross Stores is expected to achieve a revenue and earnings growth rate of 7.1% and 19.4%, respectively, for the current fiscal year.
Investing in the Holiday Retail Season
The holiday season is an opportune time for investors looking to capitalize on strong retail sales. The five wholesalers mentioned above offer promising investment opportunities, with positive earnings estimate revisions and strong growth prospects. However, it is crucial to conduct thorough research and analysis before making any investment decisions.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Nasdaq, Inc.
