10 Holiday Stocks for Your Shopping List

With the holiday shopping season in full swing, we turn to some favorite retail brands for your shopping list. These leading investing experts and contributors to MoneyShow.com highlight 10 iconic retail plays for a holiday portfolio. Camilla Yanushevsky, CFRA Research's The Outlook V.F. Corporation is a global leader in the design, production, procurement, marketing and distribution of branded lifestyle apparel, footwear and accessories. Its most notable brands include: The North Face (outdoor performance apparel, footwear and equipment); Vans (skateboard-inspired footwear and apparel); and Timberland (outdoor adventure-oriented apparel and footwear). Our positive investment view reflects attractive fundamentals and strong positioning as a performance-driven and value-creating lifestyle sports company post-Kontoor separation, completed in May. With adjusted leverage below targeted levels (debt-to-EBITDA below 2x), V.F. Corp. has significant capacity to pursue its M&A agenda, while delivering superior returns to shareholders. (V.F. hiked its dividend 12% to $0.48/share and $3.8 billion remains under current share repurchase authorization). The successful launch of FutureLight on Oct. 1 has generated strong brand heat and supports our bullish outlook into the holiday season and FY 2021 (Mar.). Our 12-month target is $105, 30.5x our FY 2020 estimate of $3.44, above the three-year historical forward P/E average, reflecting momentum in Vans and The North Face, which we expect to drive 80% of growth over next five years. Risks to our view include unexpected bankruptcies, which weighed in the September quarter of FY 2019. Despite macro challenges like forex, tariffs and disruptions in Hong Kong impacting FY 2020 EPS by $0.07, or 2%, we remain confident in the stock's resiliency. Ned Piplovic, DividendInvestor Best Buy offers a current $0.50 dividend distribution that is equivalent to a $2.00 annualized payout and yields 2.4%. The company has boosted its annual dividend payout every year since beginning dividend distributions 17 years ago. The 10-fold advancement since 2003 corresponds to an average dividend growth rate of 14.5% per year. The 25% asset appreciation since early December 2018 and the continued dividend income growth combined for total return of nearly 30% over the last year. The three-year total return was even higher at nearly 85%. However, Best Buy's shareholders more than doubled their investment over the past five years with a total return of 135%. Founded in 1971, Bed, Bath & Beyond sells a range of household merchandise, including linens, kitchen and bathroom articles, basic housewares, and general home furnishings. Its current $0.17 quarterly dividend payout corresponds to a $0.68 annualized distribution and yields 4.4%. Since beginning dividend distributions in 2016, the company has boosted its annual payout every year. A 36% boost from an annualized $0.50 distribution in 2016 to the current payout corresponds to an average growth rate of 8% per year. An 80% share price drop since late 2014 delivered total losses of 77% and 63% over the last five and three years, respectively. However, the current share price is nearly 90% higher than its 10-year low from mid-August 2019. Furthermore, the 14% share price gain has helped produce a total return of nearly 20% over the trailing 12 months. George Putnam, The Turnaround Letter Founded by legendary retailer Les Wexner, L Brands has failed to stay relevant to customers of Victoria's Secret (about 55% of sales), leading to an 8% decline in year-to-date same-store sales. Slowing mall traffic weighs further on its prospects. Investors threw in the towel on LB shares in August following yet another weak quarter. However, the November report showed signs that the company is waking up: new leadership at PINK, strength in the Beauty line, and impressive performance in the Bath & Body Works segment. Renowned hedge fund Bridgewater Associates recently added to its sizable stake. Levi Strauss owns one of the most highly-regarded brands in the world. Its ubiquitous blue jeans are sold in over 50,000 retail locations in 110 countries, as well as through Levi's burgeoning online business. Its shares debuted at $17 and surged to over $22 on the first trading day, but that enthusiasm has faded as the shares now trade slightly above their IPO price. Levi's otherwise sturdy revenue and profit strength is being obscured by the strong U.S. dollar and some sluggishness in the wholesale channel. The company continues to invest in its growth initiatives and expand its direct-to-consumer operations and product array.The shares are valued at a reasonable multiple, and the modest debt is nearly fully offset by cash. Investors might want to try on Levi's for size. Jason Clark, The Prudent Speculator Despite turning in a solid quarter, shares of Foot Locker plummeted after the specialty retailer gave a bit more conservative outlook than expected and said that it would discontinue providing quarterly guidance, although it will offer annual projections. Of course, as long-term-oriented investors, we are more than fine with the change. Of course, we understand that in the near-term, the stock could remain under pressure. At the end of the day, we like that the company has continued to reiterate its four strategic imperatives: elevating customer experience; investing in long-term growth; driving productivity; and leveraging the power of its talent pool. We also are pleased with the continued work to become a more well-rounded omni-channel retailer. We think the growing digital channel still holds a lot of opportunity, but we realize that it doesn't come without investment (via digital ad spend), which will also keep some near-term pressure on margins. We remain fans of the stock as the stock yields 4.0%, while it trades for 8 times next 12-months adjusted EPS expectations, even as consensus analyst profit forecasts still call for growth in each of the next three years. Our target price continues to reside at $73. Stephen Biggar, Argus Research A strong brand and product pipeline has enabled Nike to raise prices and increase sales of apparel and footwear. We think some retailers seeking to boost sales are turning to Nike to raise customer traffic, increasing its bargaining power as a supplier. Meanwhile, in response to changing purchasing trends, Nike is beefing up its direct-to-consumer (DTC) channel (company-owned stores and website), particularly its e-commerce business. We expect DTC sales to grow at a high-teens pace over the next two years. Although the industry remains fiercely competitive, we expect Nike to build on its dominant position through its globally recognized brand, innovative products, economies of scale, and rapid growth in emerging markets. We recently boosted our price target on this leading consumer company is $105. The shares are a featured holding in our Millennial Generation model portfolio. Brett Owens, Hidden Yields Retail has been an increasingly tough place to make a buck in recent years. The big bad Internet has huffed, puffed and blown down many brick and mortar business plans. But some brick buildings are still standing. In fact, their businesses are actually getting stronger and stronger thanks to the smackdown that Amazon is laying on their competitors. Firms like TJX Companies are able to buy their discounted merchandise at even bigger discounts. Being among the last stores standing, they can name their price! Plus the online world still can't compete with the thrill of finding a bargain in person. The rise of online shopping is actually helping Internet-resistant retailers. As competitors have dropped off, the company's profit margins have improved by 41% over the last decade. The growth formula for TJX Cos. is pretty simple: add new stores. There are 4,412 worldwide today -- including T.J. Maxx and Marshall's -- and management believes there's enough room for nearly 40% more. The company's profitability may appear modest. However, the firm makes up for it in exceptional volume. Over that 10-year period its dividend has increased by an insane cumulative 667%. Wall Street is finally starting to give TJX shares the respect they deserve. Management has already been making its move, repurchasing more than one-quarter of the company over the last decade, with 7% of its float removed in the last three years alone. These share buybacks make everything about TJX look better on a per share basis, especially the dividend that drives the price. Plus the company has a potential kicker in e-commerce. Its mobile apps for T.J. Maxx and Marshall's are, shall we say (ahem), a bit beta at this point. But building and releasing the app is the hard part, and the firm should be able to improve the mobile experience (and sales volume) from here. TJX Cos. is a dividend raiser that is being thrown out with the entire retail sector. We should grab our stake in the shares before Wall Street fully wakes up to this recession-proof growth story. Crista Huff, Cabot Undervalued Stocks Advisor Abercrombie & Fitch , which yields 4.6%, is an undervalued small-/micro-cap stock -- and a buy in our buy low opportunities portfolio. The company reported adjusted third-quarter 2019 EPS of $0.23 and revenue of $863.5 million. The company delivered their ninth consecutive quarter of positive U.S. comparable store sales (comps) and their third consecutive quarter of total revenue growth on a constant currency basis. The company also repaid $10 million of debt and repurchased 412,000 shares of stock during the quarter, and repurchased 3.96 million shares of stock year-to-date. The share count is down 8% since year-end 2017. Management reported U.S. comps up 3%, with all brands showing increases, offset by international comps down 8% and foreign currency headwinds. Protests in France, Spain, and Hong Kong, and general tension over Brexit, have affected international sales. Management is working through a multi-year process of updating and right-sizing their stores. They delivered 34 new store experiences during the quarter and 70 year-to-date, remaining on track for their goal of 85 new store experiences this year. The company has 881 stores operating right now. The Hollister store count is up seven for the quarter and 12 year-to-date. The A&F store count is up 11 for the quarter and eight year-to-date. Wall Street projects EPS to fall 34% in 2019, then rise 74% in 2020. The 2020 P/E is around 11.9. I expect the stock to perform well in 2020, but share price performance for the balance of 2019 remains a wild card. The stock presents a great value to patient investors. Ben Reynolds, Sure Dividend Hanesbrands is a leading marketer of everyday basic innerwear and activewear apparel. It has a number of well-known brands such as Hanes and Champion. Hanesbrands spent $2.9 billion on acquisitions in the last seven years but has dramatically underperformed the S&P 500 in the last five years. The strongest growth catalyst for Hanesbrands is direct-to-consumer sales. As consumers are increasingly shopping online, there is a huge opportunity for apparel manufacturers to sell directly to consumers. The company is also seeing strong growth in its core Champion brand, which grew sales by 26% globally last quarter. This was the 9th consecutive quarter of double-digit global sales growth excluding the U.S. mass channel. Based on expected earnings-per-share of $1.78 for 2019, Hanesbrands stock trades for a price-to-earnings ratio of around 8.3. This is significantly below our fair value estimate, which is a price-to-earnings ratio of 10. If Hanesbrands shares trade up to fair value, annual returns would be increased by 3.8% per year. In addition, we expect 3% annual earnings growth, and the stock has a current dividend yield of 4.0%. Overall, total returns are expected to reach 10.8% per year over the next five years.

10 Holiday Stocks for Your Shopping List

These iconic retail plays are ideal for a holiday portfolio.

Columnist Conversation

This Weekend on Real Money

Friday Morning Fibocall for 10/22/2021

10-Year Note Yields

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.