5 winning retail stocks coming out of Christmas

Well-to-do shoppers and those seeking premium goods are spending with gusto. Here are the companies really ringing up profits.

By Traders Reserve Dec 20, 2013 4:31PM
The Apple logo is seen on the facade of the Apple Store
© Maja Hitu/epa/Corbis
 By Michael Shulman


Amidst the chaotic year-end holiday push, a few key retailers and retail stocks are emerging as real winners. While all the initial preliminary macro data suggested Christmas sales would be sluggish, perhaps no more than 2% above 2012, more recent data from the National Retail Federation (NRF) puts growth at 3.9% in November and at the same pace through the rest of the shopping season.

It is an admittedly bifurcated marketplace -- people with money are spending it, people struggling are spending less than last year. But the NRF data and ChangeWave (part of the 451 Group) surveys show well-heeled shoppers are spending in key segments.

Here are five big winners among retailers and retail stocks this season:


Williams-Sonoma (WSM)

I admit I have a personal bias. I love the merchandising in WSM stores and believe it is the best in retail. Retail sales surveys and data indicate people are spending a good deal on fixing up their homes -- from renovation to the purchase of pots and pans. Census Bureau data shows a more than 9% projected increase in home furnishing sales.

Williams-Sonoma will claim its fair share and probably more. Why? Walk the store and you see, every quarter, a bit more shelf space dedicated to everything in food and food preparation -- from jars of sauces to three families of copper pots.

EPS growth has been in the double digits and is projected to be the same in 2014 even though the company sells at only a slightly greater multiple than the overall S&P 500.


Ralph Lauren (RL)

Go to any outlet mall and the busiest store -- with buyers, not just shoppers and tire kickers -- is the Polo store. Unlike most competitors, the Lifshitz (Mr. Lauren’s birth name) designs and manufactures products specifically for discounters and its outlet stores.

Consumer Reports rates Ralph Lauren's discount products the closest to the products sold in the high-end company stores among all clothing makers. This barbell approach -- $2,000 blazers in one store, $200 blazers (on sale at Macy's this summer) at the low end give the company extensive market coverage and a great approach to this Christmas. The stock has been stuck for a while, it could break out based on this holiday shopping season.

Tiffany & Co. (TIF)

The jeweler did well when gold was above $1,600 an ounce. Gold is now below $1,250 and falling. Sales in Asia are bouncing back as some consumer optimism returns to Japan and the credit bubble continues to inflate in China.

As with Ralph Lauren, Tiffany has a broad, near-bifurcated product line - $50,000 cufflinks and a $35 shot glass I once bought for a newborn (a long story that one). The company hedges precious metals purchases, meaning the full impact of the crash in precious metal prices will boost margins and profitability over a sustained period of time.

Costco (COST)

You would not think a retailer seen as a super-deep discounter would do well when people who end to shop at discount stores are hurting. Except Costco does not serve that market. Roughly half of sales are to small business, roughly half of their members are high-end earners and spenders; people living week to week do not shop there.

The company is exceptionally well-managed. It starts employees at $11.50 nationwide. Costco is growing while Wal-Mart is not. The boom in electronics sales this Christmas -- ChangeWave Research and the Census Bureau data back this up -- is driving up sales per square foot at Costco and should lead to a great quarter.


Apple (AAPL)

Yes, Apple sells products as a retailer and by far and away is the best retailer on the planet. Apple's stores have sales per square foot higher than any other -- $6,050 in 2012. The next closest was Tiffany at $3,017, with Lululemon (LULU) a transparent third at $1,936.

My local Apple store, which is probably 70 feet by 25 feet in space, has 140-150 employees. Really. iPhone 5 sales are beyond brisk. ChangeWave Research tells us tablets are the No. 1 product this Christmas and Apple has 72% of that market. Wall Street is still worried -- so much so that Apple is selling at discount to the S&P 500.


More from Traders Reserve




Dec 22, 2013 5:36PM
that's wrong: putting a giant apple logo on an MSN site.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
266 rated 2
485 rated 3
660 rated 4
586 rated 5
652 rated 6
640 rated 7
504 rated 8
289 rated 9
159 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.