Thanksgiving week is here and investors will be anxiously awaiting the results of Black Friday sales and the impact they have on retail stocks.
Here's a look at stocks that analysts are eyeing ahead of the important shopping holiday.
KeyBanc on Black Friday: The crucial retail holiday of Black Friday is assessed by KeyBanc analysts, who express a "cautious near-term view" regarding consumer spending during this shopping season.
Analysts Brad Thomas and Ashley Owens explored opportunities in the retail sector ahead of the holiday shopping season.
"With Black Friday approaching and the all-important holiday season underway, we highlight key consumer trends and our views on outperformers/underperformers in the weeks ahead," the analyst said.
The analysts also look at seasonality, forecasts from the National Retail Federation and the impact of an extra day in the 2023 holiday calendar.
"In recent months, we have seen weakness in discretionary spending, as evidenced in our proprietary Key First Look Data and comments from many retailers this earnings season."
The analysts said consumers "remain pressured by elevated inflation" and other macroeconomic concerns.
"We believe consumers will likely show up for the Black Friday weekend and the pre-Christmas shopping period. However, we believe the consumer will increasingly shop sales events as they look for deals and bargains."
The analyst singles out the following stocks as potential Black Friday and holiday shopping winners.
"We continue to believe investors can play offense and defense within the discount space, as shoppers seek value."
Five Below Inc (NASDAQ: FIVE): Overweight rating, $215 price target
Ollie's Bargain Outlet Holdings (NASDAQ: OLLI): Overweight rating, $93 price target
Walmart Inc (NYSE: WMT): Overweight rating, $177 price target
For e-commerce retailers, the analysts recommend several companies against potential softness in the space.
Nordstrom Inc (NYSE: JWN): Overweight rating, $19 price target
Lululemon Athletica Inc (NASDAQ: LULU): Overweight rating, $450 price target
On Holding AG (NASDAQ: ONON): Overweight rating, $40 price target
The analysts underscore their attention on athletic wear, citing new product launches and the "casualization of apparel" in the sector as key factors influencing consumer behavior.
Nordstrom receives a recommendation due to enhancements in its off-price Rack segment and positive developments in inventory trends.
"We expect a return to normalized purchasing behavior as compared to prior years, similar to what many companies have already been experiencing."
The analysts said Black Friday could take back share during the holiday season.
"The holiday quarter is the most important of the year."
Roth MKM on Black Friday: A recovery of the semiconductor, broadband and Internet of Things sectors are sized up ahead of the holiday shopping season.
"It's early, but as we conclude a challenging 2023 small cap tech tape, it's time to trade up to quality," Roth MKM analyst Scott Searle said.
The analyst said numbers and valuations have bottomed and anticipated 2024 smartphone growth could be a positive for the sector.
For the broadband sector, Searle highlights Calix Inc (NYSE: CALX) and Clearfield Inc (NASDAQ: CLFD) as companies to be on investors' radar. The analyst also expects Cambium Networks (NASDAQ: CMBM) and Aviat Networks (NASDAQ: AVNW) to benefit from deployments of fixed wireless access.
A recovery of the smartphone sector with growth expected in 2024 could benefit several companies. "Following two years of contraction and reaching the lowest unit volume in a decade, smartphones are expected to grow 4.5% in 2024," Searles said.
Stocks highlighted include Semtech Corp (NASDAQ: SMTC) and Interdigital (NASDAQ: IDCC) for smartphone growth.
PowerFleet Inc (NASDAQ: PWFL) and KORE Group Holdings (NYSE: KORE) are also highlighted as stocks that are improving their balance sheets and could see "meaningful appreciation into 2024."