As consumer confidence slips, Wall Street's best analysts see these 5 stocks as the best post-holiday plays

Published Wed, Dec 30 202012:57 PM EST

Key Points

Despite U.S. consumer confidence dropping for a second straight month in December, there are a number of categories ripe for a comeback.
Positioned to benefit from long-delayed federal aid, these are the latest picks by Institutional Investor's top-rated analysts this year.

(This story is for CNBC Pro subscribers only.) Despite U.S. consumer confidence dropping for a second straight month in December, there are a number of consumer categories ripe for a comeback as investors look ahead to a post-pandemic future. For the past 49 years, Institutional Investor has surveyed research directors and chief investment officers at major U.S. money management firms to get their take on the best equity analysts in each sector. Named to this year's list are Christopher Horvers, Joseph Greff, and Matthew Boss of J.P. Morgan, Robin Farley of UBS and Edward Kelly of Wells Fargo Securities. These top analysts have placed their bets on companies positioned to benefit from long-delayed federal aid into the other side of a once-in-a-century health and economic crisis. These are the top picks of the best consumer analysts on Wall Street. The decline in confidence remains one of the latest indications that an economic recovery from the pandemic is losing steam. The move followed data this month showing the economy in November added the fewest jobs since the recovery started in May. Retail sales decreased in November for a second straight month and the number of people filing new claims for unemployment benefits is at three-month high. Against this backdrop, President Donald Trump signed a massive coronavirus relief and government funding package into law Sunday. The signing came five days after he sent Washington into a panic by suggesting he could veto the bill that he considered was a "disgrace," demanding lawmakers raise the second round of stimulus checks to $2,000 per person, from $600. "This is more in line with the dollar amount that has been done historically when they have pursued this," Ed Mills, Washington policy analyst at Raymond James, said of the $600 checks. "It will be enough for some consumers and not enough for others." The Treasury Department has said the $600 payments started going out Tuesday night. If Congress approves the increase to $2,000, it will then be added to the original sum. But Senate Majority Leader Mitch McConnell on Tuesday blocked Senate Minority Leader Chuck Schumer 's attempt to unanimously pass a bill that would increase direct payments in the year-end package. "It's very fast, it's money that gets recirculated in the economy," Treasury Secretary Steven Mnuchin told CNBC's Jim Cramer . "People go out and spend this money, and that helps small business and that helps getting more people back to work." Top analysts say that these five stocks are likely to get a boost in the new year, kickstarted by these direct payments to American consumers: Dollar Tree As many consumers continue to prioritize bargains over brands throughout the pandemic, Edward Kelly of Wells Fargo Securities sees opportunity in Dollar Tree . Two weeks ago, the analyst reiterated a buy rating on the stock and $130 price target , which puts the possible upside at 19%. Dollar Tree is among several retailers that announced store openings in 2020, according to Coresight Research. According to CNBC retail reporter Lauren Thomas , those that sell goods in categories such as off-price, beauty, home decor and sporting goods, which haven't been hit as hard as department stores and apparel chains, are some of the most optimistic about growth prospects. With a 68% success rate and 10.9% average return per rating, according to TipRanks, Kelly is among Institutional Investor's top-ranked analysts for 2020 within the consumer retail sector. J.P. Morgan's Matthew Boss — another name on Institutional Investor's list of this year's best equity analysts — also has a buy rating on this stock. Last month Boss upgraded Dollar Tree to overweight from neutral with a $130 price target, like Kelly. Dollar Tree's stock is up more than 15% year-to-date. Nike Boss also likes Nike — up 39% year-to-date. As the company continues to lean into its digital business and trim inventory, the consumer goods analyst recently maintained a buy rating on the stock and sees 20% upside to a $170 price target . As in-person shopping is expected to continue struggling throughout the new year, Nike's plans to continue paring down its wholesale partners and selling more directly to customers puts competitors more dependent on wholesalers at a disadvantage. Last week the company's shares jumped more than 5% to a fresh intraday high as investors rallied behind the sneaker maker's latest quarterly results and an upbeat outlook that not many retail companies have been able to offer during the Covid health crisis. "We think we're better-positioned at this point to manage through the uncertainty probably than we were prior to the pandemic," chief financial officer Matt Friend told analysts on the company's earnings call. "We've learned so much over the last nine months." Boss maintains a 64% success rate and a 11% average return per rating, according to TipRanks. Las Vegas Sands Las Vegas Sands lost 76% of business through the first nine months of 2020. But pent-up demand could create tremendous upside for a number of consumer travel names in the latter half of the new year. "Pent-up demand: Get used to hearing that term because it's going to define the very next leg of this just impossible-to-believe bull market," Cramer said earlier this month on CNBC's " Mad Money ". "Once enough people are vaccinated … the economy goes back to normal, travel resumes and people start gambling in person again," Cramer said. "That's why the casinos should have a huge year in 2021." J.P. Morgan's Joseph Greff seems to agree. Last month the gaming and lodging analyst maintained an overweight rating on shares of the Las Vegas-based casino operator, raising the firm's price target to $62 from $58 (5% upside potential). In a research note to investors, Greff said "undemanding" 2022 gaming estimates are likely to have more upside than downside, adding that he expects a slow recovery in the Macau market to continue as market-wide gross gaming revenue trends continue to improve. Greff maintains a 64% success rate and a 19% average return per rating, according to TipRanks. Royal Caribbean Another name expected to bounce back as a result of pent-up demand is Royal Caribbean . Excluding sailings from Singapore, last month the company announced its suspension of cruising through January. But with positive coronavirus vaccine news that could reduce the severity of the pandemic next year, UBS's Robin Farley maintained a buy rating and $84 price target on the cruise liner last month. This target puts the possible upside at 17%. Farley maintains a 69% success rate and a 22.1% average return per rating, according to TipRanks. On Oct. 30, the CDC pulled its no-sail order , which stood for nearly eight months, and replaced it with a " Conditional Sailing Order ." That new order provided a framework for the industry to begin thinking about how it can safely resume sailing. Among other requirements, it includes trial cruises that will be monitored by CDC personnel to ensure that proper infection prevention protocol is implemented. The resumption of Royal Caribbean's cruises in Singapore earlier this month was the Miami-based company's first sailings globally since it halted global operations in March due to the pandemic. Ulta Beauty Shares of Ulta Beauty are only up about 9% this year, but barring a return to normal, many analysts expect the beauty industry to get a boost from more social events and gatherings. One such analyst is J.P. Morgan's Christopher Horvers, who recently maintained a buy rating on the stock and sees 17% upside to a $330 price target . In fact, Horvers views Ulta as one of the best Covid-recovery stocks in retail, telling investors that he expects a strong "cyclical upswing" as the pandemic fades in the latter half of 2021 and cosmetics become more in-demand for "event-starved Americans". Last month, CEO Mary Dillon told CNBC that Ulta is planning to better leverage its loyalty plan through its partnership with Target , adding skincare shops in select stores starting next year. With a combined 100 million members registered to the companies' respective loyalty programs, both see an opportunity to reach new customers. "That's the exciting opportunity," Dillon said. "It gives millions of new guests an opportunity to experience and learn about brands and we know that guests are excited about this." With a 66% success rate and 10.3% average return per rating, according to TipRanks, Horvers is among Institutional Investor's top-ranked analysts for 2020 within the consumer retail sector.

Wendy Reicher (right) and daughter Scarlett Reicher,18, (left) walk back to their car after going shopping in Union Square on Tuesday, Dec. 1, 2020 in San Francisco, California.

Gabrielle Lurie | San Francisco Chronicle | Getty Images

(This story is for CNBC Pro subscribers only.)

Despite U.S. consumer confidence dropping for a second straight month in December, there are a number of consumer categories ripe for a comeback as investors look ahead to a post-pandemic future.

For the past 49 years, Institutional Investor has surveyed research directors and chief investment officers at major U.S. money management firms to get their take on the best equity analysts in each sector. Named to this year's list are Christopher Horvers, Joseph Greff, and Matthew Boss of J.P. Morgan, Robin Farley of UBS and Edward Kelly of Wells Fargo Securities.

These top analysts have placed their bets on companies positioned to benefit from long-delayed federal aid into the other side of a once-in-a-century health and economic crisis.

These are the top picks of the best consumer analysts on Wall Street.