How to Trade a Potentially Strong Black Friday and Cyber Monday

Consumers were crushed with higher inflation this year.

But they’re still spending.  In fact, according to the World Economic Forum, “real personal consumption expenditures amounted to $14.1 trillion on an annualized basis in Q3 2022, up from $13.9 trillion a year earlier.”

Heading into the holidays, the National Retail Federation (NRF) says retail sales could grow by 6% to 8% this year.  E-commerce sales are expected to grow between 10% and 12%.  “Almost two-thirds of holiday shoppers acknowledge that it is important to spend on holiday gifts and celebrations. And holiday shoppers estimate they will spend an average of $832.84 on gifts and holiday items this year, which is in line with the 10-year average,” they added.

Even better, an estimated 166.3 million people are planning to shop on Thanksgiving, Black Friday, and on Cyber Monday.  That’s about eight million more than last year, and is on course to be one of the highest counts on record.  All despite inflation.

In short, shopping could be strong.

Not only would that be great news for retailers, it could help send markets even higher, too.  All of these sales and customer numbers will give us a great indication if the rest of the holiday season will be a good one.  On the other hand, if sales and customer counts are low, that’s a bad sign that consumers will cut back on their spending.  Let’s hope that’s not the case this year.

With hopes for a strong holiday, investors may want to keep an eye on:

Target (TGT)

Target became a slow-motion train wreck after warning of a slow holiday quarter, and as profits and sales took a hit.  However, don’t count the stock out just yet.  For one, it’s Target, and is only down on temporary noise.  Two, “Analysts as a group, however, remain bullish on the name. Target stock has now lost a third of its value so far in 2022, and that has much of the Street calling shares a bargain,” as noted by Kiplinger.

Kohl’s Corp. (KSS)

Kohl’s Corp. has also been down in the dumps after pulling its full-year outlook.  But at $31.65, it’s down on temporary noise.  We also have to consider a good deal of this negativity was already priced in.  It’s part of the reason CEO Michelle Gass was replaced.    

Best Buy (BBY)

Best Buy just gapped higher after the company beat forecasts.  The company posted adjusted EPS of $1.38 on sales of $10.59 billion.  That was above expectations for $1.03 on sales of $10.31 billion.