Most retailers tend to report a significant spike in sales during the holiday season.
Investors could look beyond retail stocks this Black Friday.
Dillard’s, Etsy and Shopify could be exciting options during the festivities.
US markets are closed on Thursday for the Thanksgiving holiday. Therefore, when they reopen on Black Friday, the holiday season stock market will have officially kicked off. As expected, several retailers will report a significant rise in sales during the festivities, thus boosting the holiday season quarterly results.
However, investors could also look beyond the traditional retail store chains for more exciting investment opportunities.
Dillard’s Inc. (NYSE:DDS) shares are up more than 60% this month despite pilling back nearly 8% on Wednesday. The US department store chain specialises in fashion merchandise and accessories, as well as cosmetics and home decor.
Dillard’s most recent quarterly results beat analyst expectations on both revenue and earnings before declaring regular and special dividends. The stock still trades at an exciting P/E ratio of 13.06, despite rallying more than 550% this year.
Technically, Dillard’s shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock rallied deep into overbought conditions before pulling back on Wednesday.
Therefore, with shares finding the trendline support, investors could target potential rebounds at about $397.76, or higher at $417.50, while $357.38 and $332.26 are crucial support zones.
Etsy Inc. (NASDAQ:ETSY) is an e-commerce company focusing on handmade and vintage products, including jewellery, bags, toys and art. The company is tipped by Needham analysts to experience a significant rise in sales during the holiday quarter after outperforming Q3 revenue and earnings estimates.
The stock trades at steep valuation multiples making it less attractive to value investors. However, its growth prospects are exciting with analysts predicting an EPS growth of nearly 273% this year, before rising at an average annual rate of 40.30% over the next five years.
Technically, Etsy shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied closer to overbought conditions.
However, given the expected holiday season boost, investors could target extended gains deep into overbought conditions at about $317.35, or higher at $339.51, while $276.44 and $252.23 are support levels.
Shopify Inc. (NYSE:SHOP) offers web and mobile storefronts for businesses, allowing them to sell different products online. Therefore, with the holiday season finally here, the commerce company could witness a significant rise in traffic with several merchants promoting their products.
The stock has pulled back significantly after Loop Capital warned the rally had played out. In addition, SHOP missed revenue and earnings expectations in the most recent quarter.
However, although the stock trades at steep valuation multiples after rallying nearly 50% this year, analysts expect its EPS to skyrocket by more than 334% this year, before growing at an average annual rate of 28.76% over the next five years.
Therefore, the current bull run could continue during the holiday season.
Technically, the stock seems to have recently rebounded after finding the trendline support following a sharp decline.
Therefore, with shares still far from reaching overbought conditions, investors could target extended gains at about $1,697, or higher at $1,765. On the other hand, $1,552 and $1,471 are crucial support levels.
In summary, although the stocks highlighted here seem to have rallied significantly over the last few weeks, the holiday season could speed up the rally, which makes them an exciting option for momentum investors.