Black Friday is the name given to the first day after Thanksgiving, doh.
It is one of the most important retail and spending events in the United States. (The biggest economy in the world.)
In the last few years, Black Friday on the same day as it is in the States has become a big event in the UK and other western countries. Its another ploy to get us to spend.
Every holiday season, forecasters and analysts make predictions about the level of sales on Black Friday, and investor confidence may be affected by whether or not those expectations are met or exceeded. This can happen relatively quickly and can effect the sentiment of the investor and thus the stock price in the short term.
If consumers follow up Thanksgiving by spending a lot of money on Black Friday and retailers show strong numbers, then investors might have their first indication that it is shaping up to be a particularly profitable shopping season. This confidence can be reflected in the stock prices of the retailers that post strong sales. Conversely, many take it as a sign of trouble if retailers are unable to meet expectations on Black Friday. Concern over the economy is magnified if consumers are perceived to be reining in their spending.
How does Black Friday affect stocks?
Black Friday sales typically last for only a weekend, but sales figures are often treated as an important indicator by investors.
With consumer spending making up almost 70% of US GDP, Black Friday sales figures are sometimes viewed as a sentiment indicator.
The Retail Stocks That MAY Benefit from Black Friday
When investing in a major retailer, consider the ones that typically do well during the holiday season. This can include major retailers like toy stores and department stores offering a wide selection of gifts.
Given the economic uncertainty of 2022, it may also be worth thinking about discount businesses that focus on keeping prices low. Families on a budget may try to stretch their dollars when buying gifts.
Due to their usual high cost, electronics, including entertainment equipment and computers, do very well with Black Friday shoppers.
Beauty and Jewelry Retailers
In general, specialized retailers, such as beauty or jewelry retailers, are popular during the holiday season. It’s a time that many people choose to splurge on luxury purchases they might not otherwise make.
One sector you may not have given much thought to is restaurants. With holiday shoppers out all day on Black Friday and into the weekend, people need a place to eat or to take a break from shopping.
The return of in-person dining makes restaurants an obvious choice. Many people will eat at fast-food restaurants or mall food courts while shopping, but some will look for a more relaxed meal once they’ve finished shopping for the day.
And of course, with so many people shopping online sales these days, online retailers seem like a sure bet no matter what’s happening with the big retail chains. Many companies have increased their online presence during the pandemic in response to changing consumer shopping habits.
Retail out shines
Data shows that retail is the best-performing sector from one week before to one week after Black Friday. From 2010 to 2020, the S&P Retail Select Index (SPSIRE) gained 3.23% during that timeframe, compared to the S&P 500’s average return of about 1.8% and consumer discretionary stocks (the industry under which retail falls) posting an average return of 2.57%.1
So , if you are a trader , consider these stocks to trade in the short term or if you are an investor consider long term holds.
Amazon.com remains a Buy even amid the macroeconomic volatility. Shares of the e-commerce giant are down about 32% this year as investors have been concerned about inflationary pressures. BUY the DIP?? How will the employment cost cutting measure effect profits for the firm?
Amazon is the largest e-commerce company in the world, but while e-commerce still drives the overwhelming majority of its revenue, that part of its business has slowed significantly this year. When it comes to the impact of suppressed consumer spending power, retail tends to be on the front lines.
But green shoots emerged in the recent third quarter (ended Sept. 30). Amazon generated $127.1 billion in total revenue, a jump of 15% compared to the year-ago period, which was the fastest rate of growth in 2022 so far. Pair that result with the gradual improvement in the inflation picture, and investors can make the case that momentum might be building into 2023.
Amazon's advertising business deserves a special mention. Its $9.5 billion in revenue during Q3 marked a 25% expansion year over year, a sharp acceleration compared to both Q1 and Q2. When the economy is weak, businesses usually cut back on their marketing spend, and that has been obvious throughout this year based on the results of some of the largest technology companies. Therefore, observing Amazon's strong performance in Q3 hints that some confidence might be creeping back into the corporate world.
One area of disappointment in the recent quarter was Amazon Web Services (AWS), the company's industry-leading cloud services business. It has routinely been the bright spot for Amazon, and often accounts for the entire company's operating income thanks to its soaring growth and high profit margin relative to its retail segment. In Q3, though, revenue generated by AWS decelerated to 27%, which was the slowest pace of the year.
Investors shouldn't expect that to last, because the cloud industry is critical to the corporate world and is slated to be worth over $1.5 trillion annually by 2030, so it still has plenty of legs next year and beyond.
With Amazon stock down 46% from its all-time high, now could be a great time to get involved ahead of 2023.
Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores in the US. It is the world’s largest company in terms of revenue.
Walmart's revenue climbed 8.7% year over year to $152.8 billion in its fiscal 2023 third quarter ended Oct. 31. An 8.2% surge in the discount chain's U.S. comparable-store sales (excluding fuel) and a 10% increase in its Sam's Club comp sales helped to drive the gains.
Notably, Walmart's e-commerce sales grew by 16%. The company's nascent digital-advertising business is also expanding rapidly, with global ad revenue up over 30%.
During a conference call with analysts, Chief Financial Officer John Rainey said Walmart is winning new business from higher-income shoppers searching for bargains amid a challenging economic environment:
We've continued to gain grocery market share from households across income demographics, with nearly three-quarters of the share gain coming from those exceeding $100,000 in annual income.
Markdowns contributed to an 89 basis-point decline (one basis point is equal to 0.01%) in Walmart's gross margin. But the retailer made progress toward ridding its stores of excess merchandise.
"We significantly improved our inventory position in Q3, and we'll continue to make progress as we end the year," CEO Doug McMillon said.
Recent strong results prompted Walmart to lift its full-year revenue forecast. Management now sees net sales growing by 5.5%, up from a prior projection of 4.5% growth.
Additionally, the company's board of directors approved a whopping $20 billion share-repurchase plan.
"We're committed to continuing to provide strong cash returns to shareholders while still appropriately investing in our business for the long-term," Rainey said.
Costco is a wholesale retailer selling discounted goods through membership warehouses and online. The two fastest-growing areas are fresh foods and hardline products. The stock has run up 42.3% over the past six months.
During tough economic times, consumers tend to turn to cheaper alternatives as they keep a close eye on their spending and cut costs anywhere they can. Costco operates a membership-only warehouse, providing customers with cost savings via its bulk goods offerings. Because of this, Costco can do well in a weakening macro environment marred by persistent inflationary pressures.
Costco investors anxiously await the next earnings report. Investors may hope that release will bring a membership price increase, which has not happened in five years.
Also there is a discussion of a potential stock split. Investors may want to wait on something that has not happened in 22 years -- a stock split.
Alibaba Group is a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology. The company has been under pressure from the government in the past year and has seen a decline, which many stock market experts consider a very long-waited trampoline for the stocks to go up.
Alibaba could benefit from relaxed COVID-19 restrictions in China.
But its dismal Singles Day sales growth this year indicates that its core e-commerce business still faces brutal headwinds.
Its stock is cheap -- but it could continue to languish in 2023. Last month, Xi Jinping's confirmation to an unprecedented third term as the general secretary of the Chinese Communist Party. As a result, Alibaba's stock now trades nearly 80% below its all-time high and hovers just slightly above its IPO price of $68 a share from September 2014.
Will Alibaba recover in 2023?
Alibaba's stock looks tempting, but it's trading at such a steep discount because its growth is fading, it faces intense regulatory scrutiny in both China and the U.S., and the macro and competitive headwinds won't fade away anytime soon.
The gradual easing of COVID-19 restrictions in China might be a step in the right direction, but it definitely won't be the magic bullet that shatters the bearish thesis against Alibaba. So unless Alibaba can revive its e-commerce profit engine again -- which seems unlikely given its flat Singles Day growth this year -- its stock will continue to stagnate in 2023 and beyond.
Home Depot. The home-improvement retailer is best known for its big box warehouse stores and extensive inventory. Serving both do-it-yourself homeowners and professional contractors, Home Depot (NYSE:HD) is consistently expanding both sales and earnings. The company has built a substantial e-commerce presence while largely holding would-be competitors at bay. With a $314 billion market capitalization, Home Depot is the dominant home improvement retailer on the planet. As dominant as Home Depot is within its space, however, investors may be shocked to learn that the company's retail share of the $900 billion U.S. home improvement market was just 15% in the prior fiscal year.
Down 27% off of its 52-week high, shares of the home improvement retailer have been hammered in 2022. This is because, with the 30-year mortgage rate around 7% and interest rates continuing to rise, home sales are expected to cool off. But even with this near-term headwind, analysts are anticipating 15.7% annual earnings growth from Home Depot over the next five years.
TJX Companies (NYSE:TJX)
Is arguably best known for its TJ Maxx stores. It also owns Marshalls and Home Goods as well. All of these outlets have a common theme: brand names at discount prices.
Dollar stores, such as Dollarama hold huge long-term potential for investors, especially in this volatile market.
Dollarama is the largest dollar store chain in Canada. In addition to its 1,400-store network that spreads across every province, Dollarama also has a growing presence in several Latin American countries under its Dollar City brand.
This list is endless but common sense prevails when either trading , short term fundamentals of stocks or long term investment. We offer you the chance to do both, and CFD trading is a great way to hedge your stock portfolio over difficult times.