4 TOP Stocks to Buy Ahead of the Holidays

The holidays will be here sooner than you know it. Though many are concerned about US consumer holiday spending, new research suggests more than 50% of consumers plan to spend as much as or more than they did in previous holiday seasons.

The trend toward online shopping will continue to grow this year as more coronavirus-weary consumers make purchases via their computers, instead of shopping at brick-and-mortar stores. 

Below, we provide a look at four stocks every investor should consider buying ahead of holiday spending: Amazon (AMZN), Walmart (WMT), Target (TGT) and Best Buy (BBY).

Amazon (AMZN)

This could be AMZN’s biggest year ever as that many more people shop from the relatively safe and comfortable confines of home. If a second wave of the coronavirus emerges in the weeks and months ahead, AMZN’s sales will undoubtedly spike to all-time highs. The only question is how high AMZN’s stock can go before profit taking inevitably occurs.

As a power player in online shopping, web-based work (Mechanical Turk), groceries, cloud computing and more, AMZN is an unstoppable force hell-bent on capturing market share across more and more industries. As the saying goes, “If you can’t beat’em, join’em.” If you do not own AMZN stock, you should give serious consideration to adding it before the holidays shopping period commences.

It should come as no surprise that AMZN has exemplary POWR Rating grades. AMZN has an “A” Trade Grade and “B’s” in Buy & Hold Grade, Peer Grade, and Industry Rank. AMZN is ranked in the top 10 of nearly 60 Internet stocks.

Though AMZN is priced in excess of $3,000, the top analysts are still bullish on the stock, setting a price target of $3,764, meaning the stock has about 10% potential upside. Considering AMZN's potential to capture even more market share in both the short-term and the long-term, AMZN's forward P/E ratio of about 100 isn’t insanely high.

Look for AMZN to break through the 52-week high of $3,552 in the weeks preceding the holiday shopping period.

Walmart (WMT)

The days of WMT solely functioning as a brick-and-mortar super store are long gone. WMT has successfully pivoted toward online shopping and delivery, as well. This is a true omnichannel powerhouse that will capture even more market share in the months to come.

WMT has POWR Ratings “A” grades in Trade Grade, Buy & Hold Grade, and Industry Rank. Furthermore, WMT is ranked in the top five of 18 Grocery/Big Box Retailers stocks. The top analysts have set a price target of $149.52 for WMT, indicating the stock has more than 3% potential upside. However, this might be a conservative estimate considering WMT’s online shopping service will rake in the cash during the pandemic throughout the upcoming holiday shopping period.

WMT also has a relatively low forward P/E ratio of 26.

Though AMZN's online shopping service will continue to grow, few others can compete with WMT's vast offerings sold both online and offline at affordable prices. An added bonus is the fact that WMT is implementing healthcare clinics at its stores, giving consumers yet another reason to stop by their local WMT.

Target (TGT)

The time has come when companies that strictly provide in-person service at brick-and-mortar establishments will lose ground to omnichannel companies. TGT has expanded its services to the web and mobile apps. The company’s purchase of Shipt in 2017 was quite prudent considering the spike in demand for same-day grocery delivery amidst the pandemic. TGT provides just about everything consumers need and want including electronics sure to sell like gangbusters during the upcoming holiday period.

TGT has “A” grades in all four of the POWR Ratings component, along with an industry rank of #2 out of 18 publicly traded companies in the Grocery/Big Box Retailers space. Out of the 20 analysts who have studied TGT, 15 recommend buying the stock, four recommend holding and only one advises selling.

Best Buy (BBY)

When it comes to holiday shopping, many people are interested in buying electronics. BBY sells a variety of electronics, along with appliances and other sundries, the majority of which are tech-oriented. BBY’s emphasis on tech makes it the ideal stock to own during the holiday shopping spree.

The average person’s interests have gradually shifted away from off-screen activities to those involving screens, be it in video game form, TV, the internet, etc. Most of BBY’s inventory is screen-related.

For the POWR Ratings, BBY has “A” grades in Trade Grade, Buy & Hold Grade, and Peer Grade. The stock is ranked #1 of more than 30 in the Specialty Retailers segment. The industry's leading analysts insist BBY is underpriced, setting a price target of $122.50, meaning the stock has the potential to increase 4% to 5% in the near future.

With a fairly low forward P/E ratio of 16 and the holiday shopping period rapidly approaching, BBY has the potential to see impressive gains.

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AMZN shares were trading at $3,441.71 per share on Monday afternoon, up $155.06 (+4.72%). Year-to-date, AMZN has gained 86.26%, versus a 11.23% rise in the benchmark S&P 500 index during the same period.

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.

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