Retail Stocks Ready To Explode After Strong Start
To Holiday Shopping Season?
The Dynamic Wealth Report
November 28, 2011
by Robert Morris, Editor
The holiday shopping season kicked off with a bang this past weekend.
According to the National Retail Federation, retail sales surged 16% and
shoppers spent a record $52.4 billion.
Millions of consumers had no problem cutting their Thanksgiving feasts
short to take advantage of earlier store openings and deep discounts.
They flocked to stores like Wal-Mart (WMT), Gap (GPS), Toys R Us, and
Best Buy (BBY) to cash in on bargain basement prices.
I'm sure many in the retail industry are breathing a collective sigh of
relief.
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Heading into the biggest shopping weekend of the year, a lot of experts
were concerned retail sales would not be as robust as in years past.
And for good reason...
Europe's sovereign debt crisis is driving the region into recession and
threatening to take the entire global economy down with it. And here in
the US, unemployment remains above 9%, Washington's gridlocked on
resolving our own debt crisis, and the fragile economic recovery is in
danger of collapsing.
The lesson here... never underestimate the American consumer's love of
getting a good deal.
Heck, one "creative" lady in California even used pepper spray on her
fellow shoppers to ensure she got the Xbox she wanted. Now that's
dedication... or is it fanaticism?
Whatever it is, it shows just how badly Americans are itching to spend
this holiday season.
And it's not over yet.
Today is Cyber Monday. In case you don't know, the Monday after Black
Friday is now the biggest day of the year for online shopping.
And this year's Cyber Monday is expected to be the best one yet.
Retail industry researcher ComScore says sales are projected to hit a
record $1.2 billion. A whopping 80% of online retailers are offering
discounts this Cyber Monday. And more Americans than ever are skipping
the annual Black Friday brawl to shop from the comfort of their own
homes.
It makes sense.
Shopping online has gone mainstream as 77% of American households now
have broadband internet service. Not having to contend with the
tortoise-like speeds of dial-up has made online shopping much more
enjoyable.
What's more, the ranks of online shoppers are getting a boost from the
proliferation of smartphones and tablet PCs. With these mobile devices,
you can now shop from almost anywhere on the planet.
It used to be you had to run out to a store or two on your lunch break.
Not a very efficient way to shop for bargains. Today, you can use your smartphone or tablet PC to compare prices from hundreds of retailers in
the blink of an eye.
No question about it, the convenience made possible by today's
technology is pushing more people than ever to take advantage of Cyber
Monday bargains.
So, with all this spending going on, retail stocks are certain to
explode right?
Not so fast...
While consumers are smashing Black Friday and Cyber Monday sales
records, I don't think the robust sales trends will continue throughout
the holiday shopping season. The more likely scenario is deep discounts
have pulled sales forward from December.
In other words, look for sales to gradually decline as we get closer to
the holidays.
Bottom line...
Don't use the strong start to the holiday shopping season as an excuse
to jump into retail stocks. The debt crises, high unemployment, and
slowing economic growth will probably keep a lid on overall spending
this year.
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