Making sense of market moves
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As we enter the most wonderful time of the year, our annual American tradition of buying useless stuff you’ll forget about by February cherishing moments with family and friends has already begun.
It’s certainly been a magical month for the retail sector. The S&P Retail ETF is up 9.41% over the past month, far outpacing the 3.42% the S&P 500 has gained over the same period.
Why? Inflation has finally plateaued, so consumers have snatched back some of their beloved spending power. And some investors are betting that President-elect Trump’s proposed economic policies will result in lower taxes for consumers and bigger and better earnings for retailers—both of which bode well for this group of stocks.
Santa’s sleigh will be full of these picks
Bank of America analysts unveiled their top picks for this year’s holiday retail stars in a recent research note. They chose these names based on how far each has to climb based on its current valuation and each company’s competitive position in the market.
“We remain positive on discount and off-price retailers as we think the solid value proposition attracts customers across income demographics during times of inflationary and macro pressures,” the analysts wrote.
Here are the analyst’s top picks and a tidbit about each stock:
- Bath & Body Works: “We expect continued progress on the sales inflection, driven by new category launches and product partnerships.”
- Ralph Lauren: “We expect strength in Asia and Europe to continue alongside improving North America trends."
- Walmart: “Share gains continue across product categories and income cohorts supported by its strong value offering and digital convenience."
- Starbucks: “Initiatives from new CEO Brian Niccol should provide a runway for growth into F25."
- Hasbro: “Our leisure top pick is HAS due to strong digital & Magic momentum and improved market share and assortment in toys, alongside cleaner inventory levels."
Even if you’re not wooed by any Black Friday markdowns on stuff like apparel and appliances, maybe consider investing for the long term instead.—LB