Retail Stocks – Are Earnings Growing on Cyber Monday?

| November 29, 2010 | 0 Comments

This weekend, Linda and I started decorating for the holidays.  It’s far from a quick hour or two project.  I imagine we’ll spend the better part of a week putting up Christmas nick-knacks all over the house.  We still have to find stockings for the horses and dogs…

At least the tree is up and the lights are on… Let’s just hope the dogs don’t pee on it.

While we decorated and listened to classic holiday music, I started thinking about Christmas.  I suddenly felt overwhelmed, and not in a good way.  I haven’t made a list… I haven’t thought about gift ideas for family or friends… Who am I even buying gifts for this year?  I’m way behind the curve already!

Luckily, I have Cyber Monday to figure it out…

For those of you who don’t know, today is Cyber Monday.  It’s the biggest day for online-shopping in the world.  The term was coined a few years back.  Cyber Monday… really took off as online stores became easy to use… and workers could utilize the high speed internet connections at the office.  Today – Monday – when everyone returns to work and fires up their computer… they’re not really working.

They’re shopping!

The Friday after Thanksgiving is always a big shopping day.  It’s known as “Black Friday”, not because the day was ominous… but because the sales on that day often pushed a retailer’s financial numbers into the black!

Now Black Friday is the starting gun for the crazy holiday shopping season.

Customers are lining up at the doors waiting to grab huge deals early Friday morning.  I have to admit, on Black Friday I did a little bit of shopping in San Francisco’s Union Square.  If you’ve ever been in that area, you’ll know what I mean when I say it was a madhouse.

People were packed in 8 to 10 deep on the sidewalks.

Shopping bags and kids in strollers were everywhere.

Macy’s and Williams Sonoma were packed.

Despite my spin through the shopping district, I failed to pick up anything… for anybody.  I’ll be spending part of today searching the bowels of the internet for gifts… and gift ideas.

I won’t be alone.  Some estimate spending today alone will top $1 billion.

And that’s not a small number.  What you need to realize is Black Friday and Cyber Monday may impact you directly.  If you own any retail stocks, you might see them move higher in days ahead.

See, initial reports about Black Friday are quite positive.  Retailers say early reports show higher sales than last year… The trend is heading in the right direction!  And that bodes well for retailers… and their stock prices.

Department stores saw a big jump in shopping activity… but that shouldn’t come as a surprise.

I mentioned this was a possibility a few weeks back in my article “Why You Should Stay Away From Sears Stock”.  In the article, I noted Sears Holdings (SHLD) looks incredibly overvalued.

However, I also said, “I believe rising consumer confidence numbers mean this holiday shopping season will be better than expected.  Consumers are tired of not spending money…”

While Sears’ stock has been falling, many other retailers are looking strong. Macy’s (M) is hitting new 52-week highs and so is specialty retailer Williams-Sonoma (WSM).  I expect stocks like these to continue leading the industry higher.

This is just the beginning.  A strong start to the shopping season will only lead to bigger and better sales figures as Christmas Day approaches.  And the stores showing the biggest sales gains should see their stocks provide the biggest moves.

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Category: Stocks

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The Dynamic Wealth Report works with a number of staff writers and guest experts who specialize in everything from penny stocks to ETFs to options trading. These guest analysts post under the 'staff writer' moniker for ease of use.

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