As the holiday shopping season approaches, many consumers are busily adding items to their online shopping carts, enticed by Black Friday deals.
The allure of great discounts entices consumers, the reality remains that their monetary resources might not stretch to accommodate every coveted item on their lists.
Finbold has spotlighted two key stocks poised to benefit from the surge in retail activity at the forefront of the Black Friday frenzy.
As shoppers flock to these retail giants for their holiday purchases, these companies’ stocks are identified as potentially lucrative investments in light of the increased consumer spending.
Amazon (NASDAQ: AMZN) shares have surged by 73% this year, impressing investors with substantial profit growth in its retail divisions and a promising outlook in artificial intelligence (AI).
AMZN year-to-date trading chart. Source: Finbold
In the third quarter of 2023, the retail giant’s North American segment achieved over $4 billion in operating income, a significant improvement from the $412 million in losses reported in the same period the previous year.
If historical trends are valid indicators, there is a chance for continued improvement in earnings for the company in the coming months.
In 2022, AMZN shopping numbers surpassed the previous year, with a 2.3% increase in online Black Friday sales and a 5.8% rise in Cyber Monday figures. And a recent Deloitte survey indicates that 37% of consumers plan to allocate their holiday budgets to online spending, up from 35% last year. This suggests that Amazon could benefit from the shopping season and boost its margins.
With the business on a path to recovery and the prospect of profit from its AI endeavors, Amazon looks poised for a bright future in the coming years.
Best Buy (NASDAQ: BBY) appears to be a sound investment, considering its price-to-earnings (P/E) ratio outperforms the sector median at approximately 16x.
Also, the company has boasted an annual dividend yield of 5.3%, a stark contrast to the consumer cyclical sector’s average of around 1%. The combination of value and yield positions Best Buy’s stock as a decent investing opportunity.
However, Best Buy’s stock has struggled this year, experiencing a 12.7% year-to-date decline, and it’s currently trading at $68.03. Yet, the company has a consistent history of beating analysts’ expectations and could be on the path to recovery.
BBY year-to-date trading chart. Source: Finbold
BBY reported $1.29 earnings-per-share (EPS) in the most recent quarter compared to Wall Street’s anticipated $1.19 per share.
However, the company’s underlying fundamentals remain strong, and the current price drop could present a good opportunity to begin buying the stock.
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