Holiday spending held up this year, despite all the economic uncertainty and high inflation. It’s welcome news for a few of our stocks. New data released Tuesday shows U.S. retail sales increased 3.1% year over year from Nov. 1 through Dec. 24, according to Mastercard SpendingPulse . The report, which excludes auto sales and is not adjusted for inflation, showed online sales jumped 6.3% while in-store sales increased 2.2%. The trend for online sales continues to improve. E-commerce sales growth is expected to hit the high single digits in 2024, thanks to retailers increasing the number of products available online, speedier and more flexible fulfillment and better technology, research firm Telsey Advisory Group (TAG) wrote in a Dec. 19 note. All good news for e-commerce giant and Club name Amazon . TAG analysts made Amazon their top pick for 2024 as the company expands into new retail categories like grocery, pharmacy, and fashion. The firm sees the company’s growing profits at its Amazon Web Services cloud business as a positive, too. We tend to agree since Amazon has been able to control costs throughout 2023. The adjustment of its fulfillment network into regional distribution centers not only has reduced delivery touch-points, but now also offers less expensive delivery services to Amazon customers, enhancing the value proposition of the Prime subscription. The in-store growth, while more modest than online, shouldn’t be overlooked. It still represents a huge portion of total retail spending. Consider: E-commerce sales in the third quarter of 2023 accounted for just 15.6% percent of total sales, according to the U.S. Department of Commerce. Consumers still like to go out and shop. But with 2023 prices still at higher levels than before the pandemic, shoppers continue to seek out deals, Mastercard noted in its report. That was helped by many retailers offering promotions far earlier than usual this year. This should help off-price retailer TJX Companies , which operates retail stores like T.J. Maxx, Marshalls and HomeGoods. The company has been resilient among its retail competitors this year because of its lean inventory. But more importantly, it has the right set of high-demand, in-season merchandise which allows for high turnover. We believe the off-price category will continue to be a winner among consumers in 2024 and that TJX is the top player in this space because it has the best merchandise around. TJX has underperformed over the past month as hopes around the Fed cutting rates in 2024 has shifted investor focus to other areas. But we have stuck with the stock, believing its high-quality merchandise at discount prices will bring back investors in 2024. TAG analyst agreed, saying TJX is “well-positioned to deliver ongoing earnings growth,” for its value-oriented offerings for the family and home. They also anticipate a “rebound in the company’s home business to act as a tailwind” in 2024 after a tough year for that category this year. Another likely beneficiary is Foot Locker . Among the top performing categories this season was the apparel sector, up 2.4%. Foot Locker, which sells sneakers and apparel, was heavy on promotions this holiday season to work down its inventory levels and be better positioned for 2024. The company’s revenue and earnings growth have been a on downward trajectory, thanks to its exposure to lower-income consumers and elevated shrink (theft) levels. “Challenges remain within some lifestyle running platforms. It was in these areas where we remain promotional and working through inventory levels to get clean by the end of the year,” management said in its third-quarter post-earnings call. As a result, we aren’t too positive on the retailer just yet. But CEO Mary Dillon’s turnaround plan may finally be starting to show up in the financial results, so we’re hanging on to see how it plays out. (Jim Cramer’s Charitable Trust is long AMZN, TJX, FL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A HomeGoods shopping cart area in front of a T.J. Maxx store in Pinole, California, US, on Wednesday, May 3, 2023.
David Paul Morris | Bloomberg | Getty Images
Holiday spending held up this year, despite all the economic uncertainty and high inflation. It’s welcome news for a few of our stocks.