3 retail stocks that could explode in December

Dan Appleby is looking for top retail stocks for his portfolio heading into the festive period. Here are three he thinks could outperform.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The pandemic has been difficult for retail stocks. When lockdowns were announced, high streets were deserted and companies in the retail sector really suffered. I wrote about one company, Shoe Zone, just last week as it looks to be rebounding from the worst of the pandemic.

Here are three other retail stocks that I think are worth considering for my portfolio.

Card Factory

Card Factory (LSE: CARD) is a retail stock very similar to Shoe Zone. Only here, CARD sells commemorative products through its chain of over 1,000 stores. The company outlines its strategy as being the first choice for greeting cards.

It released a trading statement in November showing that sales continue to recover from the pandemic. Customers are spending more, with like-for-like basket values up 22.5% on a two-year comparison. However, transaction numbers are down 20.9%. I think this shows customers are still wary about shopping in stores, but are willing to spend more money if they do. Therefore, another lockdown would severely impact the business.

The reason I think this stock could do well over December is that the company says its customers are responding well to its Christmas ranges. Indeed, CARD has accelerated the third phase of its festive products.

There’s a good chance CARD will trade well over December, lockdowns aside. I’m considering buying the shares.

An online retail stock

Boohoo (LSE: BOO) is retail stock I’ve owned for a number of years now. It offers affordable and fashionable clothing on its websites. I first bought the shares at close to 30p, but recently the company has suffered from accusations of workers’ rights issues, and cost pressures.

In fact, this year alone the share price is down over 44%.

In September, the company hit record first half sales of £976m, but profit fell 5% compared to the previous period. And there was an extra £26m of expenses due to freight and logistics cost inflation.

The supply chain disruptions that businesses are experiencing are clearly a risk for Boohoo going forward. But I think the share price has fallen to a level that makes the company a buy for me again. On a price-to-earnings ratio, the shares are priced at a multiple of 20.

There’s a good chance that customers will spend more on festive outfits this year as last Christmas and New Year were hit by lockdowns. The shares are a buy for my portfolio.

A DIY retail stock

The last stock is Kingfisher (LSE: KGF), the owner of B&Q, Screwfix and TradePoint in the UK, and Castorama and Brico Depot in France. It’s the second-largest DIY retailer in Europe.

The share price reacted badly to a trading update last week and fell over 5%. However, sales were strong compared to two years ago before Covid. Market share gains are continuing too. Pre tax profit was guided to be towards the higher end of the company’s previous forecast.

I think this share could do well heading into the festive period. With holidays abroad restricted more than normal this year, consumers may look to improve their homes, and Kingfisher would stand to benefit.

Some caution must be noted if there’s another lockdown that leads to store closures. But I’m optimistic about this share heading into December. It’s a buy for me.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Dan Appleby owns shares of boohoo. The Motley Fool UK has recommended Card Factory and boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

GSK shares plummet 15% in a week! What’s going on here?

GSK shares had a bad time last week. They're down 15% as investors' sentiment soured ahead of litigation proceedings in…

Read more »

Burst your bubble thumbtack and balloon background
Investing Articles

Stock market recovery: have all the bubbles now burst?

Asset bubbles keep on coming, and here's what I'm doing to navigate through them and invest for the stock market…

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

How I’d invest £290 a month in UK shares for a passive income that beats the State Pension

UK shares can offer a lucrative path for passive income. Our writer considers a plan to double his State Pension.

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

3 of the best shares to buy now with £2,000

I reckon the best shares to buy now have strong growth in earnings and recent good news flow, such as…

Read more »

Young female analyst working at her desk in the office
Investing Articles

How I’m aiming for £500 a month in income from dividend stocks 

Here's my three-step plan for achieving a growing income from dividend stocks and three companies I'd use to help execute…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

UK shares are cheap! So why is Warren Buffett ignoring them and should you too?

Many British shares are trading cheaply and pay dividends. This is normally the hunting ground for Warren Buffett, yet he's…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

How I’ve increased my passive income by 600%

Finding the right opportunities can bring spectacular results. Here’s how our author has managed to increase his monthly passive income…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

Could lithium shares make my Stocks and Shares ISA a goldmine?

Our writer is considering buying lithium shares for his Stocks and Shares ISA. Here, he outlines the decision process he…

Read more »