A recent Goldman Sachs survey suggests consumers will likely spend more on holiday shopping this year compared to 2023.
But not all retailers are built the same.
Historically, certain retailers experience a more significant boost during the holiday season.
With that in mind, two retail stocks stand out as particularly attractive investments ahead of Black Friday.
Both have consistently outperformed their peers in December over the past ten years.
Bath & Body Works Inc (NYSE: BBWI)
Bath & Body Works (BBWI) stock has shown impressive strength this month, and its historical performance suggests further gains are possible in December.
Since 2021, the retail stock has consistently rallied over 8% in the final month of each year.
Adding to its appeal, BBWI recently exceeded Wall Street estimates for its third financial quarter.
On November 25th, Bath & Body Works expressed confidence in its ability to navigate a volatile retail environment and capitalize on the holiday shopping season, raising its full-year guidance.
CEO Gina Boswell attributed this positive outlook to “strong execution and the momentum we’re building,” reiterating the company’s commitment to sustainable, long-term profitable growth in the earnings press release.
A distinguishing factor for BBWI is its predominantly US-based supply chain.
This domestic focus, combined with the company’s growth strategy, could propel its stock to $42 by the end of next year, according to analysts at TD Cowen.
This price target represents a potential 20% upside from current levels.
Furthermore, BBWI offers investors a healthy 2.26% dividend yield, making it an attractive option for passive income seekers.
Abercrombie & Fitch Co (NYSE: ANF)
Abercrombie & Fitch Co. (ANF), despite a recent decline of more than 10% over the past month, also exhibits a historical trend of December gains, typically up to 3%.
The clothing retailer’s positive financial performance further strengthens its potential for recovery.
On Tuesday, Abercrombie & Fitch significantly surpassed Wall Street expectations for its fiscal third quarter.
Citing anticipated holiday shopping activity, the company raised its guidance for the current quarter, projecting sales growth of up to 7% during the holiday period, exceeding the 4.8% increase forecast by analysts.
“Our teams are engaged and ready to deliver for our customers this holiday season with the goal of achieving sustainable profitable growth firmly in our sights,” CEO Fran Horowitz stated in a press release.
Analysts currently see an average upside of over 25% for Abercrombie & Fitch stock.
However, unlike Bath & Body Works, ANF, whose shares recently broke above their 50-day moving average, does not currently offer a dividend.
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