It is hard to believe, especially in an unbelievable 2020, but the summer is over. The socially distanced football season is already a quarter of the way over, Halloween will have goblins with masks no doubt on your street soon, and Thanksgiving is just over a short six weeks away. What that means, of course, is many people are starting to do their shopping for the holiday season. With the internet playing a big role now for brick-and-mortar retail giants, they are ready to take on the internet big-boys.
Research still indicates that omnichannel shoppers, those that use the internet and brick-and-mortar stores, tend to spend more than those who just go shopping at malls and shopping centers. While some of this may change this year with the ongoing COVID-19 pandemic still with us, retailer expectations remain positive.
We screened the BofA Securities research universe database looking for the mega-retailers that look poised to cash in this year. We found five that are all rated Buy and look like excellent choices for investors looking to add retail-related stocks in front of the holiday season.
This company is the absolute leader in online shopping. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. It has one of the most valuable brands in the world.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Like every year, online sales should continue to grow, and Amazon remains the go-to portal for shoppers looking for bargains and a way to stay out of brick-and-mortar stores this year.
BofA Securities has a massive $3,560 price objective for the technology giant, but the Wall Street consensus figure is higher at $3,725.31. Amazon.com stock closed at $3,099.96, after sliding over 3% on the day.
This has become the ultimate destination for the American consumer regardless of the economy. Costco Wholesale Corp. (NASDAQ: COST) has a unique business model. It operates membership warehouses and it buys the majority of its merchandise directly from manufacturers, essentially cutting out the middleman. Costco sells in bulk but also at a lower price, thus fueling its rapid growth. With consumers having more free cash to spend as gasoline prices have dropped, this major retailer may continue to see large revenue gains.
Costco remains one of the few conventional retailers where metrics like store traffic, market share gains and a validated model could bode well for international growth and expansion. The company is largely unharmed by e-commerce, and it continues to add stores in strategically mapped out locations. It is among America’s most popular stores for grocery shopping.
Wall Street loves the company’s pricing authority on key items and the leading merchandising offerings, and the relatively new Costco co-branded card with Visa is a real positive. Add in the company’s growing online presence and the future looks bright.
Shareholders receive a 0.78% dividend. The BofA Securities price target is $400, and the consensus target is $363.37. Costco Wholesale closed at $358.35 on Tuesday.