How might investors capitalize on the “black Friday”

Shoppers around the world are preparing for black Friday, which this year falls on November 25. This day kicks off the traditional Christmas sales season, when the largest retailers and online retailers assign substantial discounts on most products. Very popular “black Friday” is in the US — that’s where I came up with this holiday of consumption, which, as a rule, is stretched for three days, capturing the weekend.

It is expected that this year us consumers will be more active than a year earlier. According to the National retailers Federation USA (NRF) in 2016 purchases during a three-day sales will make 137,4 million Americans, which is 3.6% higher than last year (135.8 million). It is projected that for the entire sales season, i.e. from November to December, shoppers will spend on gifts, about $655,8 billion, which is considerably more than in 2015, when their expenses were $626,1 billion.

In the report of the NRF explains that a key factor for growth will be the increase in the percentage of young buyers willing to spend money on gadgets and fashionable clothes. It is assumed that up to 86% of all purchases this Friday will make Americans aged 18 to 24 years.

The impact of black Friday on the business of retailers and manufacturers of consumer goods cannot be overstated. Most retailers in the USA get up to 30% and 40% of the quarterly revenues at the expense of sales in late November, indicates in his review of the analyst of research company Zacks Investment Research Indradeep gosh. Therefore, the purchase of shares in retailers with strong fundamentals can be a good holiday investment, said the expert.

Profitable retailers

The main beneficiaries of the upcoming consumer boom Zacks Investment Research believes a network of shops of household electronics and gadgets Best Buy, manufacturer, and distributor of children’s clothing The Children’s Place, Shoe retailer DSW, the second-largest U.S. discounter Target Corp and a chain of clothing stores Nordstrom.

According to a forecast by Zacks in 2016 Best Buy can increase revenue annually by 16.7%, The Children’s Place — by 40.5%, Target by 11.3%, and Nordstrom — 2.1%. From the seller shoes DSW not such bright prospects: at the end of year profit may decline by 12%. But the financial results of the retailer fourth quarter of 2016 need to make the investor believe in Zacks, the company’s profits during this period is expected to grow by 37%. In the next financial year is expected to net profit growth DWS by 6.92%.

In the last season of Christmas sales (from 24 November to 25 December) shares of Best Buy rose 47.8%. For 2015 they, however, lost in the price about 20%, but in January of 2016 has renewed growth and has since risen 64%. Paper The Children’s Place in the last season of sales has increased in price by 6%. For 2015 their quotations grew by 8.6% and from January 2016 have risen by 60%.

Shares of Target from a previous “black Friday” to Christmas showed a symbolic increase of 0.4%, but at the end of 2015, they rose by 6.6%. From the beginning of 2016 quotes slightly slipped by 0.7%. The capitalization of the chain stores Nordstrom, in contrast, declined in the period of the Christmas boom in November—December the company’s shares fell nearly 10%. For the year 2015 quotes Nordstrom and completely fell 55%. Since the beginning of the current year the shares of the company resumed growth, rising by 17%. Paper Shoe retailer DSW in last year’s season of sales increased by 3%, and by the end of 2015, dipped to 32%. In 2016 they demonstrate weak growth of 3.5% in January.

The choice of Russian experts

Analyst CC “Finam” Vadim Sysoyev believes that the above-mentioned five companies in the list of beneficiaries of “black Friday” is not exhausted. Expert advises investors to pay attention to the shares of the largest U.S. Department store chain Macy’s, whose average discount during sales will amount to 63.4 per cent, compared with a discount of 56% in 2015. He also notes that every year, an increasing share of Internet purchases during “black Friday”. Last year online sales increased by 14.3%, in this the season of sales is expected to rise by 13.3%.

In this regard, the most logical choice for the investor, says Sysoev, will become shares of the largest online retailer USA Amazon.com and online store eBay. “Over the last ten years paper Amazon.com in the period of sales from November to December, grown in nine cases out of ten,” explains the analyst. Sysoev also provides paper delivery services of goods United Parcel Service (UPS) whose quotes over the past ten years have also shown a positive trend in nine cases out of ten during the “black Friday”.

Head of Department of trading operations IK “freedom Finance” Igor Kleshnev adds to this list the shares of the largest hypermarket chain in the world — Walmart. This company is actively developing segment of Internet Commerce, which in the future will allow it to compete not only with retailers but with leading online retailers, emphasizes the financier. “Recently, Walmart has experienced a rather strong correction. Its shares fell from a high of $87.5 per paper to $70. This is a good opportunity to buy, because next year we expect the increase in their prices to $90,” says Clusnet.

The expert also advises investors to invest in exchange-traded Fund SPDR S&P Retail ETF (XRT), a portfolio consisting of most liquid stocks of the ten American retailers. “This week the Fund has gained nearly 4%. Soon his paper will continue to increase,” he said.

Head of training centre of PJSC “Saint Petersburg exchange” Pavel Pakhomov, in turn, allocates the shares of discount stores such as Dollar General. “It’s a network of cheap shops, which operate in 43 U.S. States. They are in normal times, arrange great discounts and sales season of their competitive advantage increases,” he concludes.