Most retailers' November sales exceeded analysts' estimates, helped by the Black Friday weekend, which accounts for as much as a quarter of the month's total.
That weekend kicked off the holiday season with sales jumping 16 percent, according to the National Retail Federation. Cyber Monday extended those gains as online sales soared 22 percent.
The dip in the stock market has created a buying opportunity, as investors may be more pessimistic than they should be.
History also shows that equities may generate gains this month. Below are five companies that are benefiting from a strong holiday season.
Not only is online shopping earning a greater share of consumers' wallet, Amazon has a deadly weapon this year: the Kindle Fire. Priced at $199, it's cheaper than Apple's iPad, and appeals to the value-oriented consumer.
With high unemployment and depressed wages, more Americans are shopping for cheaper versions of almost everything these days.
Amazon was a big winner on Black Friday, saying sales of its Kindle reader quadrupled from last year. The e-commerce giant also noted that its Kindle Fire tablet is still the most popular item on its Web site since its launch last month.
Given such momentum, Amazon is set to beat analysts' sales estimates in the fourth quarter.
Loyalty fostered by the Kindle and increased conversion to Prime membership, a service that provides free shipping for an annual fee, will help drive sales.
Still, the stock isn't cheap — it trades at 60 times forward-year earnings estimates.
But most analysts are expecting the stock to rise to at least $220, with some calling for $270. It's now at $197.
2. TJX Cos.
Americans trading down means off-price retailer TJX , which operates T.J. Maxx, Marshalls and HomeGoods, is getting richer.
The retailer posted a better-than-expected sales increase in November and showed an improvement in trends at its TJX Europe division, which is in the midst of a restructuring, for the second month in a row.
While not a big player in the Black Friday frenzy, TJX's sales held up even though unseasonably warm weather hurt its rivals. That bodes well for December sales trends, especially for gift items.
Despite hitting a new high yesterday, the stock still only trades at 13 times forward earnings estimates. Earnings are expected to grow 14 percent to 15 percent next year.
Macy's has been gaining market share with the success of its My Macy's, which matches merchandise to local tastes. Black Friday weekend was very strong for the department store, helping November sales beat analysts' estimates.
Apparel sales have been weak so far this year, but the company has shown strength in accessories, handbags, shoes and menswear. When the cold weather returns, sales of coats, gloves other winter categories will follow, boosting sales over the next few months.
AccuWeather.com is expecting a cold and snowy winter in the Midwest and Northeast, the two regions where Macy's has most of its stores.
Macy's stock has had a nice run this year, up 21 percent, but only trades at a multiple of 10 times next year's earnings. As a market-share gainer, with robust online sales, and the added benefit of luxury retailer Bloomingdale's, Macy's is poised to beat earnings forecasts in the fourth quarter.
Macy's isn't only one of America's favorite holiday shopping destinations, it's also a great holiday stock pick.
Apple has what seems to be an endless line of consumers willing to buy its products, with iPhones, iPads and MacBook Airs among the top items on many Christmas wish lists.
Deutsche Bank conducted a study over Black Friday that pointed to robust demand for all three items, and Piper Jaffray said Apple stores sold 68% more iPads per hour compared with the same period last year.
Apple has indicated that it expects to set a new record for iPad shipments in the December quarter, helped by very strong sales overseas.
Notably, this is a period that also benefits from an extra week (14 weeks versus the usual 13).
What's more, IBM CoreMetrics said 14.3 percent of all shopping on Black Friday was done on a mobile device, with Apple leading the way.
The iPhone was the No. 1 device used and the iPad was No. 2.
Investors have been concerned that the passing of Steve Jobs, a third-quarter earnings miss and a big run in the stock this year limits more gains in the stock.
Regardless, Apple should have a successful holiday, and revenue and profit will follow.
Luxury retailers are expected to fare well this holiday season. Wealthy customers haven't stopped shopping all year, while the less-affluent have been more cautious on discretionary spending.
November sales at Saks and Nordstrom exceeded analysts' estimates. That bodes well for other high-end retailers.
Coach has had solid sales momentum, which will continue through the holiday season with the frequent delivery of new products to stores and increased marketing.
Morgan Stanley says a focus on gift items and smaller impulse items such as wristlets will buoy sales unlike in other years.
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