Have you made your list and checked it twice? More likely than not, you’ll be buying some of your holiday gifts this year online. Almost half (46 percent) of holiday shopping will be done online this year, according to the National Retail Federation’s Holiday Consumer Spending survey.
Buoyed by an improved economy, consumers are expected to buy more this year. Average spending per person is forecast to hit $805.65, versus 2014 spending of $802.45, according to the National Retail Federation survey.
“We continue to see positive momentum in retail sales growth, giving us reason to believe consumers will show up this holiday season as they look to take advantage of all of retailers’ promotional offerings,” says Matthew Shay, president and CEO of the National Retail Federation.
And online retailers are gearing up for a busy holiday season. “Amazon thinks it’s going to be a blockbuster,” says Hilary Kramer, editor of the GameChangers stocks newsletter. “They’ve promised Wall Street to expect at least 14 percent revenue growth in the current quarter compared to last year. They’re hiring 100,000 temporary workers to make sure all the products ship on time.”
Millennial online shoppers are most likely to take advantage of the instant gratification option when it comes to shipping and fulfillment. According to the NRF survey, 16.7 percent of 18- to 24-year-olds and 15.9 percent of 25- to 34-year-olds will use a same-day delivery option when buying gifts, décor and other holiday items, compared to just 7.8 percent of the rest of the population.
“This is the year of online retail. Millennials play a huge role in this. They grew up in a world where online shopping is normal,” Kramer says.
“Maybe you wander around the mall, but you make your decisions on your phone on the way home. Millennial shopping habits are becoming the new normal in the economy. In countries like China, this has been the norm for years. Look at Alibaba. I think this is the year we see the center of gravity shift here as well,” Kramer says.
Here are four stocks analysts say appear to be best positioned to profit from the holiday season.
Amazon.com (ticker: AMZN). With the trend toward online sales increasing, Amazon.com should be a clear winner this holiday season. “Online has huge traction because people are tired of the mall, and Amazon is the anchor of the online mall. They have all the media. They have household supplies, even handcrafted boutique gifts now in a stab against Etsy (ETSY). And whatever market share Amazon takes this holiday season, they’re going to keep,” Kramer says. Analysts are still raising their price targets on Amazon, so there’s still time to get exposure to the stock, Kramer says. Credit Suisse rates AMZN stock as an “outperform” with a target price at $720 per share.
FedEx Corp. (FDX). As online shopping grows in popularity, who do you think is going to deliver all those gifts? FedEx is a giant in the field, and S&P Capital IQ calls FDX stock a “strong buy” with a 12-month target at $195. “We think FedEx was quicker than UPS to recognize shifting trade patterns internationally, and now they are reaping those benefits. They will be a huge beneficiary of holiday online sales,” says Jim Corridore, equity analyst at S&P Capital IQ.
United Parcel Services (UPS). The other major player in the delivery field, UPS, is still trying to recover from a 2013 black eye caused by package delivery bloopers and late deliveries. “It created a public-relations nightmare so they over-executed in 2014, but that cut into their profitability from the boost in holiday sales. They’ve undershot and they’ve overshot, and this year we are hopeful they will get it just right,” Corridore says. S&P Capital calls UPS stock a “buy” with a 12-month target at $120.
Expeditors International (EXPD). The third-party logistics company picks up goods in China and ships products by air and ocean, and is poised to benefit from increased shipping demand. “They will benefit if a lot of goods are coming from overseas for the holiday season,” Corridore says. S&P Capital calls EXPD stock a “buy” with a 12-month target at $56.
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4 Stocks Poised to Benefit From Online Shopping originally appeared on usnews.com
