A number of retailers have already started dropping Black Friday deals. Typically starting the day after Thanksgiving, the story on Wall Street is that it really marks the day that retail companies move to profitability, or in the black, for the year.
With some pent-up consumer demand and rising wages this past year, sales could blowout 2020’s pandemic-reduced numbers. While retail has already performed well as a sector this year, traders will likely fare best if they consider a best-of-breed player for the holiday season.
Some analysts see that playing out in department stores, rather than big-box stores. One such play is the relatively high-end company Nordstrom (JWN). Shares are up 131 percent over the past year. And, coming off big losses, shares are going into the holiday season at just 11 times forward earnings.
Department stores are likely good for a seasonal swing trade, with big-box stores being a better play for long-term buy-and-hold trades, particularly on market pullbacks.
Action to take: With revenue nearly double over the past year, and with company insiders owning nearly 30 percent of shares, management is likely to keep acting to keep shareholders happy in the coming months. Shares look like an interesting buy ahead of the holiday season, although they don’t pay a dividend.
For traders, the April $35 calls, last going for about $1.65, look like an interesting way to leverage a year-end rally into a potential triple-digit winner.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.