Zacks

Holiday Season to Power Retail Sales: 5 Stocks With Growth Potential

Ritujay Ghosh
5 min read

In This Article:

The retail sector is making a steady rebound, with sales growing over the past couple of months. The upcoming holiday season is expected to help retailers further, with sales projected to grow at a solid pace this year.

Given the positive outlook, investing in retail stocks like Burlington Stores, Inc. BURL, Costco Wholesale Corporation COST, Chewy, Inc. CHWY, Target Corporation TGT andLands' End, Inc. LE would be a wise decision ahead of the holiday season. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Holiday Season to Boost Retail Sales

The countdown to the holiday season has begun, with retail sales projected to rise 3.5% year over year in 2024, according to the National Retail Federation (NRA). Sales will likely grow at the slowest pace in six years but are estimated to rise between $979.5 billion and $989 billion, helping retailers that have struggled almost throughout the year.

Holiday sales grew 3.9% to $955.6 billion last year. Retailers are projected to hire between 40,000 and 50,000 seasonal workers this holiday season. Online and other non-store sales are expected to jump 9% to $297.9 billion, higher than the $273.3 billion recorded in 2023.

A separate forecast from Adobe Analytics shows online sales jumping 8.4% from the year-ago levels, hitting $240.8 billion this holiday season. Online holiday sales totaled $221.8 billion in 2023, increasing 4.9% annually. Shopping on mobile devices is expected to hit a new record high of $128.1 billion, rising 12.8% year over year.

Retail Sector Staging a Comeback

The Commerce Department said that retail sales grew 0.4% in September after rising 0.1% in August, surpassing the consensus estimate of a rise of 0.3%. Excluding autos, retail sales jumped 0.5%, surpassing analysts’ expectations of an increase of 0.1%.

The retail sector, which struggled last year and for most of 2024, has been trying to regain its lost ground. Price pressures owing to the Federal Reserve’s aggressive monetary tightening campaign to combat inflation saw interest rates hitting a 23-year high.

However, cooling inflation over the past few months saw the Federal Reserve cut interest rates by 50 basis points in September. Market participants are now expecting at least two more 25 basis point interest rate cuts this year. Lower borrowing rates are expected to give consumers more purchasing power, which will eventually boost retail sales.

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