3 top stocks to buy on Black Friday

Online shopping is forecast to surge this Black Friday. Dan Appleby analyses three stocks to buy that could benefit from the growing e-commerce sector.

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Today is Black Friday, perhaps the biggest shopping day of the year. I’m going be looking around for my own Christmas shopping deals today. But as an investor, I’m also thinking about my portfolio to see if there are some top stocks to buy to take advantage of the shopping surge.

Black Friday initially started in the US. But in recent times, the shopping trend has grown in the UK. In fact, forecasts for 2021 show that consumers are expected to spend £9.4bn over the full weekend, with online shopping at around £5.7bn.

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Here are three top stocks to buy for my portfolio that I think could benefit from a Black Friday surge.

Online behemoth

I have to consider Amazon when thinking about Black Friday. It’s revolutionised the shopping experience, firstly online, but now in its growing number of till-free stores. Amazon has a section on its website dedicated to Black Friday sales and is a past master at capitalising on the event.

Amazon is forecast to grow revenue by 22% in 2021, but net profit is set to dip by almost 2%. In the most recent quarterly earnings report, the CEO said the company is expected to take on “several billion dollars” of extra costs due to supply chain constraints.

But I consider these costs a one-off. Amazon is still growing revenue at an impressive rate, and net profit is set to rebound by over 30% next year.

So I think Amazon is a top stock to buy to make the most of Black Friday sales.

Black Friday logistics

Another great way to gain exposure to the shopping surge is through e-commerce logistics. There’s a lot that goes on behind the scenes when we click ‘buy’, and Clipper Logistics (LSE: CLG) is a company that manages it all. It offers end-to-end logistics solutions for the e-commerce sector, including e-fulfilment and returns management.

Just yesterday, Clipper Logistics announced a joint venture with US-listed Farfetch. This combination will create a global luxury brand service that uses Clipper’s specialist fulfilment capabilities. 

I have to consider the valuation before I buy the shares. The price-to-earnings ratio is now 24 for this year, which is quite high for a company that only achieves an operating margin in the low single-digits.

But with growth continuing and the new global joint venture, I think the shares are a buy for my portfolio.

Critical warehousing

The final company I’m looking at is Segro (LSE: SGRO). It’s the largest real estate investment trust in the FTSE 100. It owns a property portfolio split between smaller urban logistics warehouses, and larger big box warehouses. This diversifies the company across the whole delivery process for online shopping, from longer storage requirements, to last-mile delivery services.

The company has a large development pipeline that will be in high demand as e-commerce continues to grow. Indeed, the share price has performed very well over the pandemic, and is up 47% this year alone at time of writing.

I have to balance this against the current valuation. The shares are now priced at 1.4 times the net asset value of the portfolio. This has risen from around a multiple of one before the pandemic.

Nevertheless, I think the company will continue to benefit from the accelerating e-commerce sector so I’d buy.

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Dan Appleby has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon and Clipper Logistics. 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.

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