Cowen: Kohl's, Target, Tiffany Are Top Holiday Retail Picks

It’s the most wonderful time of the year, and that means retail stocks are back in action.

Cowen’s retail team released a report Tuesday with ideas for holiday stock plays.

Cowen analyst Oliver Chen lists Kohl’s Corporation KSS, Target Corporation TGT and ^{Tiffany & Co.} TIF as the best-positioned retailers heading into Black Friday and the holiday shopping season.

“We believe KSS and TGT are set up well to execute on internal strategies and should also be significant beneficiaries from recent dislocation from closed competitors,” Chen said in a note.

Tiffany's recent product launches are more "elevated" than last year's, and the luxury retailer's traffic-driving programs like personalization should drive strong sales, the analyst said.

More Shoppers Using Mobile Devices

Cowen forecast retail sales growth of 4-5 percent, with mobile traffic accounting for 60 percent or more of total digital traffic.

Kohl’s is one of the retailers best positioned to capitalize on mobile growth, Chen said, adding that he also anticipates strong mobile growth for Target and Walmart Inc WMT.

Analyst John Kernan lists Burlington Stores Inc BURL, Lululemon Athletica inc. LULU, Adidas AG/S ADR ADDYY and VF Corp VFC as his holiday "stock-ing stuffer" picks.

'Strong Momentum In Consumer Consumption'

The upcoming holiday season appears mostly bright, according to Cowen. The firm named "healthy" consumers, good weather, less Amazon.com, Inc. AMZN shopper overlap and a calendar with one more shopping day between Black Friday and Christmas as factors that are driving sales growth expectations.

“The market currently estimates GDP growth of 2.7 percent for Q4 vs. 2.3 percent in [Q4 of 2017], and we believe strong momentum in consumer consumption will continue into the holiday season this year," according to the sell-side firm.

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