Who will win on Black Friday

Wall Street analysts are eyeing certain retail stocks that they think will do well.

Consumer spending is set to hit record levels even amid rising prices, Labour shortages and supply disruptions. Cowen Group, a financial-services firm, believes this will be the strongest holiday shopping season in more than 20 years. The company expects holiday sales to rise 11% to 13% from a year earlier.

Cowen's John Kernan said :" Lean inventory across the industry indicates that demand has not abated, which has resulted in higher average selling prices and higher gross margins, even after absorbing incremental freight increases."

Spending has reached 58% of 2018 levels, compared with 48% at this time last year, according to Barclays' analysis of credit card transactions. "2021 will see a surge in holiday spending," said Ryan Preclaw of Barclays. "Even a fairly sharp recession at the end could give us the biggest increase in holiday spending we've seen in some time."

Some of the COVID-19 driven shopping trends of 2020 should continue this year. Consumers still prefer to shop online and shop earlier in the holiday season, according to a Goldman Sachs survey. In fact, the Goldman Sachs survey found that 25 percent of consumers who plan to shop during the holiday season this year plan to complete their shopping list before Black Friday.

Meanwhile, categories such as experiences and apparel, including sportswear, are expected to show the biggest growth from last year, Goldman said. Companies that benefit from these shopping trends, and those that manage supply and labor challenges best, could emerge as winners in the holiday season.

Amazon currently has about 40% of the U.S. e-commerce market, according to JPMorgan. The retail giant's expanded delivery network, increased seasonal hiring and early holiday promotions should solidify its lead in the industry, the company said.

Goldman's consumer survey found amazon to be the most popular holiday shopping destination in the US, with 34.6 per cent of participants naming the company as their no. 1 holiday retailer in their plans. Big-box retailers Walmart (WMT) and Target (TGT) were also Wall Street's holiday darlings.

In Goldman's survey, Wal-Mart was the second most popular shopping platform in the U.S. after Amazon, while Target gained the most share. Like Amazon, walmart and Target have increased quarterly hiring and delayed black Friday promotions. "This should reduce the risk of late delivery or limited inventory," jpmorgan's Anmuth said.

Several companies are bullish on Etsy's performance over the holidays. Analysts say the online market will benefit from the supply chain environment. Anthony Chukumba of Loop Capital Markets said Etsy sellers are expected to provide more reliable shipping, and that home sellers can avoid supply-chain issues faced by other Etsy e-commerce companies."

Also, Dick's Sporting Goods could be a holiday winner. Consumers plan to spend more on sneakers and sportswear this year, according to Goldman Sachs. "Athleisure and sneaker trends are strong, and we think the casualization of apparel and footwear will accelerate in FISCAL 2022," Cowen's Kernan said.