Investment Opportunities

Holiday Shopping Season 2019: Winners and Losers

Successful trading doesn’t start with simply reacting to the market.

It starts with planning what the market is going to do months and even years from now.

For years I’ve been writing about the death of brick-and-mortar retailers and indoor malls. And last week, I covered the ongoing “retail apocalypse” in the U.S.

Store closings are well on their way to setting a new high-water mark in 2019.

But this isn’t something to lament.

It’s part of the evolution of business. Besides, there are companies surviving – even thriving – during this extinction-level event. And they’re not just found in the U.S.

That’s why, this week, I’m looking at the retailers projected to post the largest revenue wins for the final quarter of the year.

For investors looking to sail higher with shares of these bulletproof retailers, there’s even better news on the horizon. These companies are about to hit their busiest time of the year.

Sugarplums and Amazon Prime

The next few months are a gauntlet of spending sprees known as the holiday shopping season.

Because of the impact and ease of online shopping, the official start of this window is inching closer to Thanksgiving. As soon as the pumpkin pie is served, consumers log on to their favorite sites and start shopping.

This year, Americans are expected to spend roughly $730 billion during the holiday shopping season. That would be a new record.

Right in the middle of this chaos is an important date we can’t overlook – November 11. Also known as Singles Day in China. It’s by far the largest online shopping day in the world. In fact, more than $30 billion will be shelled out for gifts on that shopping holiday.

That’s a total no single day – or even handful of days – anywhere else in the world can compare to.

With that in mind, let’s take a peek at the retailers projected to win big this holiday season.

There are plenty of recognizable names on the list. But also a few surprises…

Chart - Retailers by Projected December Quarter Revenue

Despite rumors of its demise, Walmart (NYSE: WMT) continues to hold on to its top spot as the largest retailer by revenue.

For the fourth quarter, the discount retailer is projected to report sales of $142.75 billion. That’s an 11% sequential increase from the third quarter. And it puts Walmart way out in front of the rest of the pack.

Now, even though the company’s e-commerce sales are surging year over year and grabbing headlines, it’s important to keep perspective. These sales still account for only a very small piece of Walmart’s (mince) pie.

Meanwhile, Amazon (Nasdaq: AMZN) remains the king of e-commerce.

For the holiday quarter, the online retail giant is projected to see $87.35 billion in revenue. This quarter is its biggest of the year and is projected to be roughly a 27% increase over its third quarter.

Right on Amazon’s heels is Apple (Nasdaq: AAPL).

The iPhone maker’s December quarter is always a big one. The company’s latest models of iPhones, iPads and other devices were recently released… just in time for holidays. Because holiday spending is such a huge jolt for Apple, Wall Street is looking for the company to report $87.26 billion in sales – a 38.8% increase from third quarter sales.

Then there’s CVS Health (NYSE: CVS) at No. 4, with more than $64 billion in sales.

From there, it’s a big step down to Costco (Nasdaq: COST), Walgreens Boots Alliance (Nasdaq: WBA), Kroger (NYSE: KR), Home Depot (NYSE: HD) and Target (NYSE: TGT).

Of course, to round out the list are the two big Chinese e-commerce powerhouses – JD (Nasdaq: JD) and Alibaba (NYSE: BABA).

For the December quarter, JD’s sales are projected to jump 27.3% from its prior quarter to $23.01 billion. Alibaba is expected to see a 34% sequential increase to $22.09 billion for its December quarter.

Now, just as U.S. retailers see a boom from the holiday shopping season, a number of Chinese companies enjoy a big upswing in revenue because of Singles Day. This benefits Baozun (Nasdaq: BZUN), Jumei International Holding (NYSE: JMEI), Vipshop Holdings (NYSE: VIPS) and others.

The Year-to-Date Home Stretch

Year to date, mall-based retailers like Abercrombie & Fitch (NYSE: ANF), American Eagle Outfitters (NYSE: AEO), J.C. Penney (NYSE: JCP), Macy’s (NYSE: M), Nordstrom (NYSE: JWN), Urban Outfitters (Nasdaq: URBN) and more have seen their shares cratered.

But these large retailers have broken away from the pack…

Chart - Retailers Ranked by Share Price Gains

In fact, Target is moving like a small cap, up more than 70% already in 2019. Apple is up more than 50%. And all but three of the companies are outperforming the broader markets this year.

The only two of the list above that have struggled are Kroger and Walgreens.

As we rush headlong into the holiday shopping season – not just here in the U.S., but in China as well – there’s no shame in targeting the largest retailers by revenue.

They’ve already put on solid performances year to date. And we’re about to head into their most profitable period of the year.

Here’s to high returns,

Matthew


About

Matthew’s expertise ranges from classic industries such as oil and mining to cutting-edge markets like small cap tech, cannabis, 3D printing and cloud computing. With almost two decades of financial experience under his belt, Matthew’s knack for finding market trends never fails to surprise us, which is why we keep a close eye on his free e-letter, Profit Trends.

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