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4 Stocks to Buy as Black Friday Sales Hit Record High

Zacks.com logo Zacks.com 11/28/2022

Consumers spent like never before on Thanksgiving and Black Friday, marking an impressive start to the holiday season. Economists had predicted holiday season sales to be quite low compared to last year. However, the predictions seem to be proven wrong, with Black Friday sales hitting a record high.   

E-commerce has been playing an important role in driving overall retail sales, and the latest Black Friday sales are proof of that. Given this scenario, stocks with a strong online presence, like Chico's FAS, Inc. CHS, PC Connection, Inc. CNXN, Vivint Smart Home, Inc. VVNT and Dollar General Corporation DG, and, are expected to benefit in the near term.

Black Friday Sales Hit Record High

According to the latest report from Adobe Analytics, consumers spent a record $9.12 billion on online shopping on Black Friday. Overall online sales on Black Friday increased 2.3% year over year. Black Friday had sales totaled $9.03 billion in 2020.

Electronics sales were the biggest contributor to this massive jump, with overall online sales surging 221% over an average shopping day in October. Toys sales jumped 285% year over year, while exercise equipment sales climbed 218%.

A major reason behind this year’s jump was the Buy Now Pay Later deal that lured consumers to shop freely as they continue to struggle with soaring prices and inflation. Payments from this deal soared 78% on Black Friday compared to a week earlier.

Smartphones played a key role in this year’s Black Friday sales, with a record 48% of the orders made on smartphones, up 4% from last year.

Retail sales on Thanksgiving Day were also robust, with consumers spending a record $5.29 billion shopping online, increasing 2.9% year over year. According to Adobe, consumers spend $2 billion to $3 billion on average on online shopping on a typical day.

E-Commerce Driving Retail Sales

E-commerce has been playing a major role in driving overall retail sales ever since the outbreak of the pandemic. The pandemic compelled millions to shop from home as they realized its benefits and comfort. The trend has since continued, with retailers too now making aggressive efforts to strengthen their online arm.

That said, the unexpected jump in Black Friday and Thanksgiving Day sales comes amid pressures of high prices and inflation. Consumers have been forced to cut down on spending on luxuries. However, high demand has been helping the retail sector, pushing sales amid inflationary pressures.

This saw retail sales increase a solid 1.3% in October, beating analysts’ expectations of a rise of 1%. E-commerce was once again responsible for this jump, with online sales growing 1.2% month over month.

E-commerce will continue to play a major role this holiday season and in the near term. According to the Department of Commerce, e-commerce sales in the United States surpassed $1 trillion for the first time to reach $1.02 trillion in the past 12 months. E-commerce spending was earlier projected to hit $1 trillion in 2024 but surpassed the target this year itself, proving the immense potential that the market has.

Also, the Adobe report expects Cyber Monday sales to hit $11.2 billion, increasing 5.1% year over year.

Our Choices

Given this scenario, it would be wise to invest in these four stocks with a strong online presence. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chico's FAS, Inc. is a cultivator of brands serving the lifestyle needs of fashion-savvy women 30 years and older. CHS’s portfolio currently consists of three brands: Chico's, White House Black Market and Soma. Currently, Chico’s operates boutiques and outlets throughout the United States and Canada, as well as an online presence for each of their brands.

Chico's expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. CHS presently sports a Zacks Rank #1.

PC Connection, Inc. is a direct marketer of brand-name personal computers. CNXN also markets related peripherals, software, and networking products to business, education, government, and consumer end users located primarily in the United States.

PC Connection’s expected earnings growth rate for next year is 29.1%. The Zacks Consensus Estimate for current-year earnings has improved 4% over the past 60 days. CNXN presently carries a Zacks Rank #2.

Vivint Smart Home, Inc. is a smart home company primarily in North America. VVNT delivers an integrated smart home system with in-home consultation, professional installation and support delivered by its Smart Home Pros, as well as 24/7 customer care and monitoring.

Vivint Smart Home’s expected earnings growth rate for the current year is 70.2%. Shares of VVNT have gained 17.5% in the past 30 days. Vivint Smart Home presently has a Zacks Rank #2.

Dollar General Corporation is one of the largest discount retailers in the United States. DG trades in low-priced merchandise, typically $10 or less. Dollar General offers a wider selection of merchandise, including consumable items, seasonal items, home products and apparel.

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