Top Stocks to Buy Ahead of the Holiday Shopping Season

Stocks such as Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) and Indigo Books & Music Inc. (TSX:IDG) could benefit from a better retail performance in the holiday season of 2017.

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A September survey conducted by Purolator indicated that retailer expected 2017 to be a better year for retail sales than 2016. Of the retailers surveyed, 89% said e-commerce had shifted customer buying patterns, and 80% are expecting increased sales during this holiday season.

Let’s take a look at three stocks that could see big future earnings due to a surge in 2017 holiday retail sales.

Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) stock has climbed 15.9% month over month as of close on November 15. The company adjusted its forecast, as it expects its e-commerce platform to yield bigger results in the quarters ahead. In a late October article, I’d discussed the surge in e-commerce retail sales and focused specifically on Canada Goose for its success in this regard. Seasonally adjusted e-commerce retail sales were up 41% in the most recent Statistics Canada August report.

Canada Goose released its fiscal 2018 second-quarter results on November 9. Revenue jumped 34.7% year over year to $172.3 million. It posted direct-to-consumer revenue of $20.3 million compared to $5.5 million in fiscal Q2 2017. Gross profit also climbed to $87.1 million from $59.3 million the previous fiscal year.

The company will now get to see how its knitwear line will perform in the holiday season along with its traditional winter clothing line.

Indigo Books & Music Inc. (TSX:IDG) is a Toronto-based book, gift, and specialty toy retailer. It operates stores in every Canadian province and tends to perform extremely well during the holiday season. Indigo stock has increased 6.6% in 2017 and 16% year over year.

Indigo released its fiscal 2018 second-quarter results on November 1. Revenue climbed 3.5% to $224.5 million. The company noted that this was very positive considering the release of the hit children’s play Harry Potter and the Cursed Child in the same period last year. Lifestyle and toy categories posted especially impressive growth, which is a great sign heading into the holiday season.

Indigo launched five new locations Guelph, Ottawa, Toronto, and Edmonton in the quarter. The stores, boasting a new concept geared to reflect the company’s transformation into a “cultural department store for book lovers,” showed 16% revenue growth. The company ultimately reported a net loss of $4.7 million compared to $1.2 million in the previous year, as Indigo made significant investments to upgrade its digital development, marking, supply chains, and the store re-imagining.

Aritzia Inc. (TSX:ATZ) is a Vancouver-based women’s fashion brand. Shares of Aritzia have declined 36% in 2017. I pinpointed Aritzia as one of my top clothing retailers to target after the Roots Corp. IPO disappointed.

The company released its fiscal 2018 second-quarter results on October 5. Revenue jumped 10.2% to $174 million, and the company reported net income of $5 million compared to a net loss of $67.3 million in fiscal Q2 2017. Like Canada Goose, Aritzia has also worked hard to expand and improve its e-commerce business to make it a focal point of its business model looking ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.

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