Black Friday isn't just about shopping for stuff. Savvy investors who are on the hunt for a bargain may also find some undervalued stocks.
But if your strategy involves betting on the companies expected to see an uptick in sales from holiday shopping, the pickings might be slim this year.
Forecasts for fourth-quarter sales growth are looking a bit grim, according to Morningstar's chief US market strategist, David Sekera. Brick-and-mortar sales are expected to rise by 2.4% compared to last year's 5.1%. Online shoppers are likely to spend a bit more, with sales forecasted at 6.9%, but even that's still below last year's 10%.
Big retailers like Walmart or Target aren't positioned to be good bargains, according to Sekera. This means investors must dig a bit deeper to find hidden value in other brands.
Below are the stocks that Sekera lists as his top picks for holiday bets. Four of the names are trading at discounts well below their fair market value, which is based on the firm's projection of a company's future cash flows and the predictability of those flows, according to Morningstar.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.