Short Black Friday. Buy Cyber Monday.
Daniel is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In typical Foolish humor, MarketFoolery host Chris Hill made an interesting point: "If Black Friday were a stock, I would short it; and if Cyber Monday were a stock, I would buy it." Joe Magyer of Motley Fool Inside Value responded, "You can do that. It's called the short Best Buy (NYSE: BBY), long Amazon (NASDAQ: AMZN) trade." Whether he was kidding or not, the reasoning is sound. With online sales on the rise, some stocks are poised to benefit and some are poised to suffer.
Cyber Monday VS Black Friday: By The Numbers
On Black Friday, foot traffic was up 3%. Good news right? Maybe. But the better news was that Cyber Monday online sales were up 30%. But it wasn't just on Cyber Monday that online sales recorded a boost. According to a data release from ComScore, year-over-year online retail sales were up 26% on Black Friday, surpassing $1 billion in sales. To put these sales into perspective, online sales represented 9% of total sales on Black Friday.
In general, only 5% of overall spending is represented by online sales for retail spending. In other words, there is plenty of room for online spending to continue to increase. Who will benefit from this growth in online spending? Who will suffer?
Stocks To Consider
Companies with a strong mobile selling platform and a large mobile audience are set to benefit. Consider, for example, eBay (NASDAQ: EBAY): Gross merchandise volume on Black Friday was up 150% on its mobile platform.
Of course there is Amazon, who not only experienced the most traffic of the five retail stores with the highest online traffic on Black Friday, but it also experienced the highest year-over-year growth rate in number of visitors on Black Friday.
Don't forget about the middleman. Payment companies should benefit from the online trend as well. Take eBay's PayPal, for example. On black Friday PayPal witnessed a 193% year-over-year increase in payments.
Stocks To Avoid
Though foot traffic was up 3% on Black Friday, sales were actually down 1.8% for brick and mortar retail stores. Some companies who rely heavily on brick and mortar sales, e.g. Best Buy, J.C. Penney (NYSE: JCP), and Sears (NASDAQ: SHLD), will most likely continue to suffer from this trend.
Revenue paints the story pretty clearly. Companies with the majority of their sales online are increasing sales. On the other hand, brick and mortar retail stores are missing out:
AMZN Revenue TTM data by YCharts
Stock prices follow suit:
AMZN Market Cap data by YCharts
The Bottom Line
Adjust your portfolios accordingly. Online sales are growing and they don't look like they will be slowing down any time soon.
DanielSparks has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Best Buy. Motley Fool newsletter services recommend Amazon.com, Best Buy, and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!
