Investment U Analysts on the Rising Tide of E-Commerce in the Holiday Shopping Season

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Investment U analysts agree that now is the time to invest in stocks ahead of the holiday shopping season. According to their research, e-commerce retailers are gaining rapidly on brick-and-mortar stores.

Black Friday e-commerce

Investment U Research Team

Why put up with long lines and shoving when you can take advantage of online sales? A growing number of consumers are doing exactly that.

Americans are projected to spend nearly $1 trillion this holiday season. And more than $650 billion will be spent on gifts. Analysts at Investment U agree that now is the last chance for investors to buy certain retail stocks ahead of the holiday shopping season.

Emerging Trends Strategist Matthew Carr recently forecasted a 3.6% year-over-year increase in holiday gift sales. This prediction is based on data collected since the start of the recovery from the Great Recession.

He wrote, “Since the recovery began in 2009, holiday sales have increased an average of 3.4% annually. So this year’s projection is a little above average.”

However, the Investment U team’s research indicates that consumers are changing their holiday shopping habits. In a recent column, analyst Bob Creed observed that e-commerce sales are growing at nearly double the rate of in-store sales.

Creed quoted the world’s largest retail trade association in his projections. “This year, the National Retail Federation predicts holiday e-commerce sales will increase 6.8% from 2015.”

This data clearly shows a shift toward e-commerce in consumers’ holiday shopping decisions. It implies that investors should pay attention to retailers which favor online business.

These include e-commerce giants like Amazon, as well as traditional retailers like Wal-Mart which are focusing more resources on e-commerce.

The analysts’ predictions align with last year’s holiday shopping patterns. Carr was already documenting the rapid rise of e-commerce at the beginning of the last holiday season.

“In a recent consumer survey, a staggering 51% of people said they will do most of their online shopping on Amazon. Wal-Mart was second at 16%...” he wrote in November 2015.

The financial implications of this trend are quite obvious. The traditional holiday shopping ritual of lining up at a physical store is rapidly being replaced. More and more holiday shoppers are focusing on e-commerce deals instead. Seasonal and trend-based investors must adjust their strategies accordingly.

As Creed said in his most recent column, “Why put up with long lines and shoving when you can take advantage of online sales? A growing number of consumers are doing exactly that.”

Carr and Creed are both senior analysts at Investment U, a financial news and education newsletter with more than 400,000 subscribers.

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Samuel Taube
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