The Black Friday-Cyber Monday weekend is one of the busiest weekends of the year for the retail industry. In fact, many consumers often wait to make large purchases until that weekend, if possible. Because of this, investors should consider companies that are poised to surprise in terms of sales over that weekend. In this article, I’ll discuss two retailers that investors should buy now.
This is an easy choice
When it comes to online retail, Shopify (TSX:SHOP)(NYSE:SHOP) will always be a company that investors should consider. It is one of the largest enablers of the e-commerce industry. In Q2 2021, Shopify surpassed Amazon in quarterly customer traffic for the first time in history. This suggests that the company is continuing to increase its share of the global online retail industry.
Last year, I wrote that Shopify could be a great stock to pick up ahead of the Black Friday-Cyber Monday weekend. The reason I believed that is because it seemed like investors were discounting the impact of the COVID-19 pandemic on the online retail industry. Shopify reported that its stores had sold US$5.1 billion over that weekend, representing a 76% increase on the previous year’s sales.
This year, it’s widely believed that online shopping will grow at a slower pace, due to the resurgence of in-store shopping. However, I believe that the lingering effects of the pandemic could result in stronger online sales than most investors expect. If that’s the case, Shopify could surprise once again. With more than 1.1 million merchants using Shopify to power online stores, worldwide, Shopify certainly has every opportunity to do well this Black Friday-Cyber Monday weekend.
An interesting company for your portfolio
Aritzia (TSX:ATZ) is a stock that I’ve never covered before, and I’m honestly kicking myself for it. There is so much to like about this company, and I believe other investors may have wrongfully ignored it as well. As you may have seen in malls near you, Aritzia is a Canadian women’s fashion retailer. It defines itself as an “everyday luxury” retailer. The company has physical locations in Canada and the United States. However, what’s most interesting is its growing e-commerce business.
Over the past few years, Aritzia has been working hard to move away from its brick-and-mortar business and optimize its online offerings. From 2016 to 2020, Aritzia saw its e-commerce revenue grow at a CAGR of 36%. However, over the past year, the company’s ecommerce revenue has increased 88%. In addition, a greater proportion of its business is now coming from e-commerce channels. In fiscal year 2020, 23% of its revenue came from online channels. In fiscal year 2021, e-commerce sales now represent 50% of its total revenue.
This shift in focus towards e-commerce could push Aritzia to new heights. Investors are quickly realizing how significant of a move this could be for the company and are pushing the stock to new highs. Year to date, Aritzia stock has gained 108%. Aritzia currently trades at about 56 times the previous year’s earnings. This makes it a very expensive company in terms of value. However, investors are often willing to pay up for quality and this could be another case where it should be considered.