With Black Friday coming up next week, now might be the perfect time to do some shopping for your investment portfolio. It’s sure to be one of the busiest spending days of the year, as in 2019 online shopping sales hit an all-time high of $7.4 billion. Every year, more and more companies are participating in the festivities by offering special deals and discounts that could attract more customers than ever before. The smartest investors are thinking ahead about which companies might benefit the most.
While 2020’s holiday shopping season will be quite different than years past thanks to the pandemic, we should still anticipate strong numbers from companies that offer robust online shopping platforms, unique products, and reliable delivery services. We’ve put together a list of 3 stocks to buy ahead of Black Friday below to help you take advantage of the businesses that are likely to find success this holiday shopping season and beyond.
While there might be fewer people physically shopping at mass-market retailers like Target on Black Friday, it’s clear that digital sales will still provide ample revenue for the company during the busiest shopping weeks of the year. With a strong e-commerce presence along with convenient buying options such as curbside pickup and home delivery, Target is well prepared to handle high volumes of shoppers next week. Regardless of how things go for the company over the holidays, Target is one of the best retail companies to own and has thrived throughout the pandemic.
The company reported blowout earnings again in Q3 including year-over-year GAAP EPS growth of 46.3% and year-over-year revenue growth of 21.3% to $22.6 billion. Digital sales for the company grew by 155% in Q3 and that metric could see even better growth next quarter after the holiday shopping season subsides. With a dividend yield of 1.58% and a stock that continues to hit new all-time highs, Target could be the gift that keeps on giving for long-term investors.
Another stock that is worth a look ahead of Black Friday is Sonos, a company that offers wireless multi-room home audio systems. Its products could be a big hit this holiday season, as people look to add a sonic boost to their digital entertainment experience at home. It makes sense that Sonos has been doing well during the pandemic, as people are spending more time at home than ever before.
Sonos reported very impressive Q4 earnings last week that saw the company deliver a record 8.2% adjusted EBITDA margin and a revenue increase of 16% year-over-year to $339.8 million. Direct to consumer revenue increased by 67% year-over-year as well, which tells us that this company’s brand and customer experience are attracting more buyers. Sonos increased its guidance and expects revenue in the range of $1.44 billion to $1.5 billion for 2021, which would represent year-over-year growth in the range of 11% to 15%. The stock hit new all-time highs last week but has pulled back to provide a decent entry for long-term investors. It wouldn’t be surprising to see Sonos hit $30 per share in the coming months, particularly if the company has a strong Black Friday.
Black Friday would be a lot different without air freight & logistics powerhouses like United Parcel Service ensuring that consumers promptly receive their purchases. As one of the largest global package delivery companies in the world, UPS is greatly benefitting from long-term tailwinds such as the e-commerce boom. It’s a company that should also see nice growth in the future thanks to small and medium business clients and healthcare shipment services.
UPS reported strong Q3 earnings results that saw consolidated revenue increase by 15.9% year-over-year, record international revenue, and growth across all business segments. However, the stock sold off following the earnings release thanks to concerns about Q3 EBIT margins which contracted to 11.1% versus 11.6% in 2019. This is likely only a temporary issue, as lately the company has been handling more B2C shipments that have a higher cost per shipment. These margins should improve next year as UPS invests in staff and equipment to handle the demand. With a 2.47% dividend yield and plenty of positive takeaways from the latest earnings report, UPS is a great stock for long-term investors that want exposure to a company playing a vital role in the holiday shopping season.
Before you consider Target, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Target wasn't on the list.
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