The huge growth of sales on the internet has been staggering and should continue this year. Last year between November 1 and December 31, online sales hit $91.7 billion, up 11% from $82.5 billion in 2015. The 2016 holiday season also broke a major the e-commerce record, as Cyber Monday became the largest online shopping day in U.S. history, generating $3.45 billion in online sales, up 12% from 2015. Black Friday wasn’t far behind, with sales jumping nearly 22% year over year to $3.34 billion. While this year’s numbers aren’t all in yet, they are expected to be gigantic.
Clearly the companies that dominate the internet are poised to do well, but there are some old-school brick-and-mortar stocks that also have a big internet presence and look poised to post gigantic sales as well. Jefferies has focused on what is expected to be another banner year during the holiday season, and the firm likes two top retail stocks.
We also screened our Wall Street research database for other internet and retail companies that will be the big winners.
This top retailer has traded sideways for almost all of 2017 but is Jefferies favorite specialty retailer for the holidays. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States that offer private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online at Kohls.com and through mobile devices.
While retail chains have suffered from internet pressure, Kohl’s has held its own as consumers see the company as a solid discount retailer. In addition, Amazon is growing its partnership with the department store chain. Last summer, the two companies announced that Kohl’s would begin selling Amazon devices, such as the Echo and Fire tablets, at 10 of its stores. Kohl’s also will be accepting Amazon.com returns at certain U.S. locations.
Jefferies is very bullish on the company’s prospects for the season and noted this:
45% of respondents from our survey intend to increase spending at Kohls this holiday season. The analyst thinks that the company is a share gainer as their initiatives to drive traffic appears to take hold and will benefit from peer store closings, new brand additions and omni-channel initiatives. Margins are on the upswing, driven by growth in regular priced sales, while cost savings and efforts to right size select boxes are also helping.
Investors receive a 4.88% dividend. The Jefferies price target for the stock is $48, and the Wall Street consensus target is $43.11. But the stock was trading at $45.15 early Monday.
The giant retailer posted huge quarterly results and also is Jefferies favorite stock for the holidays. Wal-Mart Stores Inc. (NYSE: WMT) is the world’s largest retailer, operating retail stores in various formats, including Sam’s Club, in the United States as well as a growing e-commerce business (including Jet.com). Internationally Walmart also operates locations in Argentina, Brazil, Canada, China, Japan, Mexico and the United Kingdom.
Each week, nearly 260 million customers and members visit the company’s 11,535 stores under 72 banners in 28 countries and e-commerce websites in 11 countries. With fiscal year 2016 revenue of $482.1 billion, Walmart employs approximately 2.2 million associates worldwide.
The Jefferies report had this to say:
The company’s big earnings-per share beat last week reflected strong +2.7% U.S. comparisons and the 1 & 2-yr comparison trends accelerated with the best performance in 8 years. Wal-Mart’s omni-channel momentum continued in the quarter with healthy gross merchandise volume and owned e commerce growth plus broad-based strength in stores.
The company announced earlier this year a massive $20 billion stock repurchase plan that was met with open arms by Wall Street. Many think it is in an effort to ward off potential activist investors. Most shareholders could care less.
Shareholders receive a 2.24% dividend. Jefferies has a $110 price target, while the consensus target is $99.94. The shares traded recently at $97.50.
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