• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Transportation

Color These 2 Stocks Black Friday

Amazon should remain the dominant outlet for holiday shopping, and UPS will help do the delivering.
By CHRIS VERSACE
Nov 08, 2017 | 11:00 AM EST
Stocks quotes in this article: AMZN, WMT, TGT, SPLS, BBY, HD, M, NKE

As we finish off the Halloween candy and take the decorations down, consumers are again moving their minds and spending dollars in step with the year-end holiday shopping season. Over the last few weeks, we've received rather upbeat forecasts for the season. We'd note that most of these forecasts focus on the period from November to December/January, more commonly known as the Christmas shopping and return season that culminates in post-holiday sales, which will have retailers looking to make room for the eventual spring shopping season. 

The National Retail Federation (NRF) expects holiday retail sales in November and December -- excluding automobiles, gasoline and restaurants -- to increase 3.6% to 4% to reach $678.75 billion to $682 billion, up from $655.8 billion last year. As we always say, context and perspective are key and this year's forecast compares to last year's growth of 3.6% and the five-year average of 3.5%. Christmas falls 32 days after Thanksgiving this year, one day more than last year, and is on a Monday instead of Sunday, giving consumers an extra weekend day to complete their shopping. 

What's missing from the NRF's forecast is the accelerating shift to digital shopping (online and mobile). That led us to collect and parse the following: 

Deloitte expects retail holiday sales to rise as much as 4.5% between November and January, vs. last year's rise of 3.6%, to top $1 trillion. In line with our thinking, Deloitte sees e-commerce sales accelerating this year, growing 18% to 21% compared to 14.3% last year, to account for 11% of 2017 retail holiday sales. 

EMarketer is forecasting total 2017 holiday season spending of $923.15 billion, representing 18.4% of U.S. retail sales for the year, a 0.1% decline from last year. Parsing the data from a different angle, that amounts to nearly 20% of all 2017 retail sales. Digging into this forecast, we find eMarketer is calling for U.S. retail e-commerce sales to jump 16.6% during the 2017 holiday season, driven by increases in mobile commerce and the intensifying online battle between large retailers and digital marketplaces. By comparison, the firm sees total retail sales growing at a moderate 3.1%, as retailers continue to experience heavy discounting during the core holiday shopping months of November and December. 

As we saw above, a differing perspective can lead to greater insight. In this case, eMarketer's data put e-commerce's share of this year's holiday spending at 11.5%, with November and December accounting for nearly 24% of full-year e-commerce sales. 

Global business-advisory firm AlixPartners forecasts 2017 U.S. retail sales during the November-January period to grow 3.5% to 4.4% vs. 2016 holiday-season sales. Interestingly, the firm arrives at its forecast using some mathematical interpolation -- over the past seven years, year-to-date sales through the back-to-school season have accounted for 66.1% to 66.4% of retail sales annually, with holiday sales accounting for 16.9% to 17%. 

Based on nine years of aggregate data from midsized and large online retailers, NetElixir forecasts this year's holiday e-commerce sales will see a 10% year-over-year growth rate. NetElixir also predicts Amazon's (AMZN) share of holiday e- commerce sales will reach 34%, up from the 30% share it owned last year. 

Collecting these other forecasts, the quick and rather obvious consensus view is that digital shopping will continue to take consumer wallet share. That bodes extremely well for Amazon and its two-day Prime shipping, especially given data that suggest roughly 71% of domestic households have a Prime account. Per Statista, it's estimated there were 90 million U.S. Amazon Prime accounts, up from 63 million as of June 2016. Two other statistics coming from the recent Internet Retailers Conference and Exhibition (IRCE) show that roughly $4 out of every $10 spent online in the U.S. is with Amazon (43%), and 80% of online growth comes from Amazon sales. 

Also helping Amazon over other retailers is its position as the low-cost online price leader. Per a new report, "Price Wars: A Study of Online Price Competitiveness," that analyzed the prices of more than 52,000 exactly matched, in-stock products across 13 categories including beauty, toys and games, electronics and pet supplies, collected daily from June to August 2017, Amazon's prices are lower compared to online efforts from Walmart (WMT) , Target (TGT) , Staples (SPLS) , Best Buy (BBY) and Home Depot (HD) . With wage growth tepid and ballooning credit card and student debt, odds are shoppers will turn to Amazon to stretch their disposable spending dollars this holiday season. 

In my view, this makes Amazon the company to own as digital shopping grabs consumer wallet share this holiday season. When I think of digital shopping, I am reminded that some way, somehow, the ordered merchandise needs to get to the intended person. While there is often talk of Uber, Lyft and the U.S. Postal Service, the company with the consumer-facing hub and spoke logistics-delivery service is United Parcel Service UPS. Not only will its business benefit as Amazon's digital shopping grows this holiday season, but as retailers from Macy's (M) to Best Buy and Nike (NKE) to Apple AAPL look to compete with the online giant. With the company expected to deliver more than 750 million packages this holiday season plus a new price increase set for Dec. 24, we continue to see favorable operating leverage ahead. (Apple is part of TheStreet's Action Alerts PLUS portfolio.)


Check out all of Real Money's Black Friday Stock Picks:

  • Fitbit, Mattel on My Black Friday Watch List
  • This Massively Under the Radar Stock Will Make You Money Off Black Friday
  • Here Are Two Completely Obscure Retail Stocks to Trade Ahead of Black Friday
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Versace had no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Consumer Discretionary | Transportation | Consumer | Markets | E-Commerce | Stocks

More from Transportation

Tesla's Got You Revved Up Ahead of Earnings? Slow Down a Bit ...

Bruce Kamich
Jan 27, 2021 12:17 PM EST

All eyes will be on Wednesday night's report, but here's what the charts tell me -- and why you might consider tapping the brakes on long exposure.

Underperforming Transports, Vaccine Delivery, FOMC Statement, 3 Trading Thoughts

Stephen Guilfoyle
Jan 27, 2021 7:31 AM EST

Wednesday afternoon the Fed's Federal Open Market Committee will publish the central bank's first official policy statement of 2021.

Before Punching the Clock, Here's an Uber Trade

Mark Sebastian
Jan 26, 2021 3:08 PM EST

The writing is on the wall for the gig economy, but I see a play in this name.

Hyliion Should Keep Truckin'

Timothy Collins
Jan 21, 2021 2:49 PM EST

I see a good trade down the road in this commercial fleet alternative-power truck name.

Don't Waste Energy Divining Energy's Future; Ride With LNG Shippers Instead

Jim Collins
Jan 21, 2021 10:30 AM EST

A hot market for liquefied natural gas makes companies that transport the fuel sensible plays at a time when oil is demonized.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:48 AM EST STEPHEN GUILFOYLE

    Cashing in Some More Chips at Stocks Under $10

    We're trimming a position for a big gain today.
  • 08:34 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/27/2021

    The "correction" can be coming sooner than we thou...
  • 09:35 AM EST CHRIS VERSACE

    Another Big Winner for Stocks Under $10

    We're ringing the register Tuesday morning.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login