Retail

Deutsche Bank Says 4 Retail Stocks Were Black Friday Winners

Lee Jackson

Published: December 1, 2015 11:05 am

Last Updated: January 13, 2020 4:37 pm

Many of us roll our eyes at the very thought of going shopping on Black Friday, especially when we see the video of people fighting over items. The reality is that for many it is very enjoyable, and the bargains can be outstanding. A new Deutsche Bank research report zeroes on four retailers the analysts think came away as the big winners this year.

While traditional brick-and-mortar retail did well on Friday, the numbers continue to drop every year as consumers decide to stay home and make their purchases via the company’s websites. With retailers offering free shipping, this for many beats the holiday at the mall experience. The Deutsche Bank team feels that based on their work, four retailers were winners in what was an overall softer weekend than in past years.

Foot Locker

Deutsche Bank says the athletic shoe retailer had a big Black Friday. Foot Locker Inc. (NYSE: FL) is a specialty retailer that operates 3,419 stores in 23 countries in North America, Europe, Australia and New Zealand. It sells through its Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, Champs Sports, SIX:02, Runners Point and Sidestep retail stores, as well as its direct-to-customer channels, including Eastbay, FootLocker.com and SIX02.

Many Wall Street analysts feel that consumers are bearing price increases from the top companies like Nike and Under Armour. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return on invested capital, which they think is a source of multiple expansion. That should be just the ticket to get a further lift in the stock price. The company said in its third-quarter earnings report that comparable sales jumped 8.7%, beating nearly every other retailer.

Foot Locker investors receive a 1.53% dividend. The Thomson/First Call consensus price target for the stocks is $75.10. Shares closed Monday at $65.

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J.C. Penney

This is one of the companies we covered that offered shoppers among the highest percentage discounts. J.C. Penney Co. Inc. (NYSE: JCP) is on the leaderboard this year as far as discounts for their customers, and the Deutsche Bank team feels the iconic retailer did well on Black Friday. The company made big inventory strides so as to not run out of the top-selling items, a problem that was severe last year. In fact, last year, after a successful Black Friday weekend, many J.C. Penney stores were out of stock through Christmas in key items like boots, small kitchen appliances, sheets, towels and some consumer electronics.

Despite the struggles over the past five years, which included the dreadful hiring of Ron Johnson from Apple as CEO, the company remains one of the nation’s largest apparel and home furnishing retailers. Across approximately 1,020 stores and at JCPenney.com, customers will discover a broad assortment of national, private and exclusive brands to fit all shapes, sizes, occasions and budgets.

The consensus price target is $9.86, and the shares closed on Monday at $7.97.
Kohl’s

This top retailer has been hit hard this year and could offer investors a solid entry point. Kohl’s Corp. (NYSE: KSS) also came in near the top of the discount sweepstakes for 2015. Some analysts expect that average 2015 discounts offered to customers at the retailer will be 59.7%. In addition, Kohl’s will offer the highest percentage discount in the highest price points of any of the retailers surveyed. Those price points are $500 and up.

Kohl’s also recently announced that they have unveiled eight days of amazing Cyber Week deals and spectacular savings on Kohls.com. Beginning Saturday, November 28 through Saturday, December 5, customers shopping Kohl’s digitally will discover deep online savings on top holiday gifts, a new flash sale each day and digital shopping tools that offer an easier and faster shopping experience.

Kohl’s shareholders receive a very solid 3.77% dividend. The consensus price target is $53.43. The stock closed most recently at $47.13.

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Target

Target is the only true “big-box store to show up on the Deutsche Bank winners card. Target Corp. (NYSE: TGT) has increased the focus on online sales, which currently totals right about 3% of total sales. While that number looks low in comparison to some, the huge sales volume of the store tempers the overall numbers. The company actually reported that it website was down due to very heavy Cyber Monday traffic.

Target shut down all its Canadian locations back in May, putting about 17,600 employees out of work. While difficult, it closes a very unprofitable and ill-fated chapter, and it helps Target to move forward on concentrate on the very profitable U.S. business.

With solid third-quarter earnings, many Wall Street firms raised estimates as it appears some of Target’s strength is coming at the expense of the company’s big-box competitor Wal-Mart. With low fuel prices and job growth, consumer purchasing should continue to grow. Plus, down sharply from highs printed in the summer, the stock may be an outstanding buy at current levels.

Target investors receive a solid 3.09% dividend. The consensus price target is $82.62, and shares closed on Monday at $72.50.

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While these four companies look to have had solid Black Friday sales, it is still a race right up until Christmas, which falls on a Friday this year. A good start though can make all the difference, and these four appear to be off and running.