- Amazon and Burlington are Morgan Stanley’s picks for stock winners this holiday season.
- Burlington, a department store, is thriving while retailers like Sears and Macy’s have struggled.
- A chillier winter could provide a further sales boost after two unseasonably warm years.
While Amazon has already been crowned the king of the holiday shopping season before it even begins, analysts say that the company may need to share the crown with an unlikely retailer.
The two stocks best positioned for the holidays are Amazon and Burlington, a national budget department store formerly known as Burlington Coat Factory, according to a note from Morgan Stanley.
The reasoning for Amazon’s prime position is obvious. E-commerce makes up a growing portion of retail sales, with growth historically pronounced in the holiday season.
In fact, analyst Kimberly Greenberg says that the firm believes Amazon will drive roughly half of all retail growth in the US from 2016 to 2018.
The reason for Burlington’s position is less obvious — though after looking at the retailer’s sales figures, maybe it shouldn’t be.
In August, the company reported same-store sales grew 3.5% — its 18th consecutive quarter of comparable sales growth. Over the last two years, same-store sales gew 8.9%. Plus, while mall traffic drops, Burlington has managed to increase traffic in 10 out of the last 12 months.
Colder weather could further boost Burlington’s sales.
“With two years of unseasonably warm Fall/Winter weather, BURL’s cold weather categories comped -3% in 4Q16 (18% of sales) on top of 4Q15’s -11% decline (22% of sales),” Morgan Stanley’s report notes.
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