Buy Retail Stocks Before The Holiday Boom

Retailers have had it rough. AJ Wright, Blockbuster, Borders Group and Harry &
David have all either gone bankrupt or needed bankruptcy protection in the last
year or so. These are high-profile companies, so it doesn't surprise me that
investors have been nervous about retail stocks. Despite this, there are real
opportunities to make money in this sector. As we approach the biggest time of
the year for retailers, it's time for us to take a detailed look at where the
opportunities are so that we'll know what to expect this holiday shopping
season. Black Friday is a day celebrated by retailers because it is the day when
retailers make the bulk of their sales and actually turn a profit (or go into
the black) for the year. Billions of dollars are spent by gift-giving and
bargain-hunting shoppers, and it has become a televised annual tradition for
Americans. Last year's sales numbers were up 0.3% compared with 2009, and this
year's sales are estimated to rise another 2.8%. When you're talking about
$45 billion in sales, a 2.8% increase is no small amount and these numbers are
conservative estimates. What most investors don't realize is that retail sales
have actually risen 15 straight months. The Commerce Department reported that
September retail sales rose 1.1%, which represents the largest monthly increase
in seven months. Economists were expecting a 0.8% increase in retail sales, so
this was a very pleasant surprise, as was the fact that August retail sales were
revised higher to a 0.3% increase up from previously being reported as
unchanged. When we get into some of the specifics of the report, we see that
September vehicle sales rose 3.6%, sales at restaurants and bars rose 1.2%, and
gas station sales rose 1.2%. Three months of positive same-store sales from
Walmart (NYSE: WMT ) aren't hurting the market either. So consumers appear to
be buying big-ticket items like new cars, continue to shop at discount stores
like Walmart and are dining out more. I fully expect consumers to show up in
force this holiday season as well. This is great news for specialty retailers
like Apple Inc. (NASDAQ: AAPL ), Limited Brands Inc. (NYSE: LTD ), Lululemon
Athletica Inc. (NASDAQ: LULU ) and Ross Stores Inc. (NASDAQ: ROST ). It's also
good news for companies that make the components to popular gifts like ARM
Holdings (NASDAQ: ARMH ) who makes the energy-efficient chips that go in the
iPhone, iPad and just about every other phone or tablet on the market. Discount
retail stores Costco Wholesale Inc. (NASDAQ: COST ) and Dollar Tree Inc.
(NASDAQ: DLTR ), the envy of the discount stores industry, will also benefit
from the holidays due to same-store sales growth. Lastly, since consumers
represent approximately 70% of U.S. economic growth, a strong retail season is
going to have a positive impact on Gross Domestic Product (GDP). An uptick in
GDP would infuse the stock market with renewed confidence, putting fears of a
double-dip recession where they belong to rest. This is a win-win for the
market and for investors so make sure you take advantage of this opportunity to
pick up retail industry shares ahead of the holiday boon.