As we move into the last quarter of the year, it’s clear that there is plenty of uncertainty ahead for financial markets. While for many industries it will be difficult to predict how they perform in the short-term, one thing that we know for sure is that certain businesses are going to thrive this holiday season. With e-commerce hotter than ever and the potential for more government stimulus checks heading out to Americans, many companies could be in store for their biggest holiday season yet. Deloitte estimates that e-commerce sales will improve 25%-35% during the festive period to reach $182-$196 billion and that holiday retail sales will rise between 1%-1.5% to reach $1.147-$1.152 trillion.
By looking ahead at companies that are in a position to put up huge numbers this winter, investors have an opportunity to potentially capitalize on what could be a record quarter. Some of these businesses are already benefitting from current trends like e-commerce and will likely see a nice earnings boost in the final months of the year. Below, we are going to discuss 3 stocks to buy ahead of the holiday shopping season so that you can take advantage of what could be a historic quarter for many major companies.
First on our list is a company that has been a huge beneficiary of the rise of e-commerce and is poised for a strong holiday season thanks to its unique business model and strong marketing team. Etsy offers an e-commerce platform that connects buyers with sellers of handcrafted and vintage goods. Since this company offers artisan goods that can’t be purchased at major retail stores or on other colossal e-commerce platforms like Amazon, it has a strong competitive advantage ahead of the holiday season. Etsy’s customers are very loyal and the fact that Etsy marketplace supports entrepreneurs could be another factor working in the company’s favor.
The stock is up over 190% year-to-date but Etsy’s massive growth numbers help to justify its stock price. In Q2, the Etsy reported a 136.7% year-over-year increase in revenue and a 279.4% year-over-year increase in Adjusted EBITDA. The company is forecasting 83.7% revenue growth and 155% earnings growth for the year and should continue rewarding shareholders long after the holidays are over.
The next stock to consider buying ahead of the holiday season is the largest retailer in the world, Walmart. It operates over 11,000 discount department stores, supermarkets, and supercenters and has a strong history of long-term earnings and dividend growth. If you’ve ever been inside of one of Walmart’s stores during the holidays, you probably know just how crowded and busy they are as people look to pick up food, decorations, electronics, and everything in between at discount prices.
Aside from the increased foot traffic in Walmart’s retail stores during the holidays, another big reason why investors should be interested in the stock at this time has to do with the moves the company is making to evolve from a brick-and-mortar retailer into an e-commerce giant. With an aggressive pricing strategy and expanding grocery and delivery services, Walmart has the opportunity to make this year the best holiday season ever for the company. There’s also the fact that it recently launched Walmart+ in September, which is a membership program that is meant to rival Amazon Prime. If early subscriber numbers are any indication, Walmart+ could be a huge positive for the company this holiday season.]
United Parcel Service (NYSE:UPS)
Continuing with the theme of companies that are benefitting from e-commerce demand, United Parcel Service is another stock that investors might want to add ahead of the holidays. Thanks to the global pandemic, people are having more things delivered to their homes than ever before. That could mean that UPS will see record delivery volume numbers this year throughout the holiday season. While the company has had to spend big on accommodating the massive demand from e-commerce, investors have every reason to believe that UPS is up to the task of fulfilling record numbers of orders this year. UPS had $18 billion in capital expenditures in 2017-2019 and that money has helped the company develop a very reliable and efficient logistics network.
Q2 revenue for the company was up 13% year-over-year thanks to a surge in business-to-consumer shipping, while the company’s business-to-business revenue should rebound as the economy gets back to normal. UPS reports Q3 earnings on October 22nd and investors should keep an eye out for any updates to the company’s forward guidance. UPS also offers a dividend yield of 2.41% and a strong balance sheet with over $8.8 billion in cash & equivalents as of Q2. The bottom line here is that UPS is a logistics and transportation powerhouse that should see extraordinary volume during the holiday season.
Before you consider Walmart, you'll want to hear this.
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