With Black Friday approaching fast, investors will be looking at some of the best retail stocks to buy during the holiday season. Analysts expect Amazon.com Inc. (NASDAQ:AMZN) to dominate the online space while Walmart Inc. (NYSE:WMT) and Target Corp (NYSE:TGT) were recently tipped to overcome supply chain constraints affecting the smaller players.
Although Amazon missed analyst expectations on earnings in the most recent quarter, its stock price continued to soar before pulling back this week. Investors are anticipating a strong performance during the holiday quarter, thus creating an opportunity to buy.
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The stock trades at a steep P/E ratio of about 70.21, making it less attractive to value investors. However, given its solid growth prospects, a holiday season spike could be the beginning of a major rally.
Technically, AMZN shares seem to be trading within an ascending channel formation in the intraday chart. As a result, it has surged closer to overbought conditions. However, with the stock recently pulling back towards the trendline support, a rebound could be on the cards.
Investors could target profits at about $3,763, or higher at $3,900, while $3,460 and $3,302 are support levels.
Unlike Amazon, Walmart trades at a reasonable P/E ratio of 51.25 whilst also offering decent growth prospects. Analysts expect its EPS to increase at an average annual rate of about 8.11% for the next five years.
Although the company cited inflationary pressure as a potential concern during the holiday season, analysts think its inventory levels could help overcome supply chain constraints.
The company outperformed analyst expectations in the most recent quarter whilst also raising its FY2021 guidance.
Technically, Walmart shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock price has advanced to trade above the 100-day moving average, thus creating an opportunity for a short-term pullback.
However, with the shares far from reaching overbought conditions, investors could target extended gains at about $149.09, or higher at $152.01. On the other hand, $143.39 and $140.24 are solid support zones.
Like Walmart, the Minneapolis, MN-based retail store chain beat Q3 analyst expectations on both revenue and earnings. However, the stock has since declined after analysts pointed to weakening margins.
Nonetheless, the company CEO said the holiday season could be stronger than expected, thus sparking optimism. Bank of America analysts also recommended TGT among its top buys, citing long-term tailwinds.
Therefore, the holiday season could be the time to buy the stock.
Technically, Target shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has plunged to trade below the 100-day moving average, creating an opportunity for a technical rebound.
Therefore, given the optimistic views expressed by analysts, investors could target potential rebounds at about $255.05, or higher at $262.31, while $240.86 and $233.24 are crucial support levels.
In summary, although retail stocks face significant pressure amid supply chain and inflation concerns, the holiday season could be a significant catalyst. Therefore, with Black Friday approaching fast, now could be a good time to invest.
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