4 Hot Retail Stocks for the Holidays - Investment Ideas

Don't look now, but just as summer fades away, the prime-time holiday shopping season is about to take flight. It kicks off with Halloween, gains momentum over Thanksgiving and then closes with a big bang on Christmas and New Years.

The importance of holiday spending for the retailers cannot be understated, with many running at a loss for most of the year before "Black Friday" moves them into the right side of the ledger.

So even though the economy is still a bit fragile and consumers lack the confidence and firepower of years past, there will most definitely still be plenty of spending. It just might look a little bit different this time around, with two segments of the market looking very well positioned to score big gains.

Wealthy Consumers are Back

The first would be high-end retailers that cater to the affluent. Selling to the wealthy is usually a good business when the stock market is strong, and that's exactly what we have seen over the last 18 months as the economy has emerged from a near-death experience. And we are already beginning to see that trend show up on the Street, with some very strong same-store sales numbers hitting the wire over the last few days.

Value-Driven Consumers are on the Prowl Too

The other group that stands to gain are the discount retailers, which cater to the vast majority of Americans that still feel a bit uneasy about the direction of the economy. This group has posted big gains since the recessionary environment of 2008 and 2009 as bargain-hungry consumers snap up great deals and search for value.

Here is a list of two high-end retailers and two value-driven retailers with high Zacks ranks that look well positioned to rack up some solid gains over the holidays.

2 High-End Retailers

Lululemon Athletica, Inc. (LULU) has been on fire over the last few years, recently hitting a new all-time high at $48.45 after reporting a solid Q3 earnings surprise of 25%. Estimates for this high-end yoga apparel retailer have since jumped higher, with the current year up 8 cents to $1.23. With a bullish growth projection of 20%, this Zacks #2 rank stock looks like a winner. Take a look below.

\

Coach, Inc. (COH) has also been an all-star performer over the last year, recently hitting a new multi-year high of its own on a 14% Q3 earnings surprise, where the high-end fashion retailer has an average earnings surprise of 10% over the last four quarters. With a bullish growth projection of 13% and reasonable valuation, this Zacks #1 rank stock could be a holiday winner. Take a look below.

2 Value-Driven Retailers

Family Dollar Stores (FDO) is one of those silver-bullet companies that actually benefited from the weak consumer environment, recently hitting a new all-time high as value-hungry consumers flock through its doors for cheap goods. This Zacks #1 rank stock has an average earnings surprise of 5% over the last four quarters and a bullish 14% growth projection. Take a look below.

TJX Companies, Inc. (TJX) is a discount retailer that I'm sure many are familiar with, scooping up big gains over the last year on delivering serious value to its loyal customers. This Zacks #2 rank stock offers great value and a bullish next-year estimate calling for 10% growth. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
COACH INC (COH): Free Stock Analysis Report
 
FAMILY DOLLAR (FDO): Free Stock Analysis Report
 
LULULEMON ATHLT (LULU): Free Stock Analysis Report
 
TJX COS INC NEW (TJX): Free Stock Analysis Report
 
Zacks Investment Research