Top Retail Stocks to Consider for a Black Friday Boost

The market’s uptick this week was to be expected, as stocks tend to rise around Thanksgiving due to seasonal optimism. Furthermore, the holiday-shortened week led to lighter trading volume, which reduced volatility and allowed positive sentiment to carry through.

Even better is that retail stocks may continue to carry this momentum, with increased consumer spending data in October setting the tone for what is expected to be a record holiday shopping season.

That said, here are a few of the most appealing retail stocks to consider with Black Friday sales set to take the spotlight.   

Macy’s – M

Stock Price: $22

Zacks Rank #2 (BUY)

It’s not ironic that Macy’s M stock is at a 52-week high, as the retail department chain conglomerate is known for its annual Thanksgiving Day Parade in New York City. However, there are real fundamental drivers that are starting to illustrate the iconic American enterprise's turnaround and transformation to adjust to the new age of consumer shopping.

To that point, Macy’s stock is doing well because of strong earnings beats, raised guidance, and investor optimism around holiday sales amid the company’s strategic shifts. Actively expanding its online presence as part of its “Bold New Chapter” strategy, Macy’s has made digital growth its core focus.  

On top of this, Macy’s “Reimagine 125” initiative has modernized select stores, driving the strongest comparable sales growth in three years when it most recently reported results for its fiscal second quarter in September. Buyout rumors and speculation about restructuring have added fuel to investor enthusiasm, with Macy’s stock remaining attractive for an income-focused portfolio strategy considering its 3.25% annual dividend yield.   

Amazon – AMZN

Stock Price: $232

Zacks Rank #2 (Buy)

It seemed like Amazon AMZN stock was being somewhat unfairly looped into valuation concerns stemming from the tech sector, but has been a favorable buy-the-dip candidate. Rebounding swiftly in the last few trading sessions, the e-commerce behemoth is arguably the king of holiday shopping deals and is expected to set a quarterly revenue record during Q4 with estimates at $211.23 billion. 

Quite frankly, Amazon’s growth and diversification can’t be overlooked, especially with its forward P/E multiple getting closer to the benchmark S&P 500’s 26X. Plus, Amazon’s price-to-sales ratio of 3X is actually beneath the broader market’s 5X. Needless to say, Amazon’s cloud services, AI, and robotics expansion is hard to ignore at current levels, not to mention its growing streaming and advertising services.

Apparel Leaders Poised for a Rebound

Most intriguing to those eyeing more upside potential in the retail sector is that there are a number of apparel leaders that still look poised for an extended rebound. Crocs CROX stock is one to highlight, with a Zacks Rank #1 (Strong Buy). The leading footwear brand is seeing a positive trend of earnings estimate revisions, with FY25 EPS estimates revised up to $12.13 from $11.45 a month ago.

At around $85 a share, this makes Crocs’ 7X forward earnings multiple even more appealing in regard to CROX making the argument for being undervalued. Better still, FY26 EPS estimates have risen from $11.41 thirty days ago to $12.60.

Another retail apparel stock that is starting to make the argument for a sharp rebound following a 50% drop from its one-year peak is Lululemon LULU. Although the yoga-inspired athletic apparel leader has faced increased competition, LULU now trades at a far more reasonable valuation and currently lands a Zacks Rank #3 (Hold). While the trend of earnings estimate revisions hasn’t been as compelling, Lululemon is expected to post annual EPS of $12 or more in its current FY26 and FY27. Lululemon is also known for having a loyal customer base that may propel the company during holiday shopping. 

Bottom Line

Retail sales are expected to exceed $1 trillion for the first time during this holiday shopping season, and these stocks could very well be some of the beneficiaries. For now, the retail sector is a hot spot for investors.

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This article originally published on Zacks Investment Research (zacks.com).

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