Bridget Weishaar: Overall, we think that the consumer is continuing to recover, and we expect holiday retail sales to be relatively strong with growth in the 3.5% to 4% range. We think that wage growth has still been pretty weak, though. So, the consumer is not quite back to where she was at prerecession and, therefore, we think retailers are going to be very competitive to get a share of her wallet.
We are looking for three trends going into the holiday season this year. The first is we expect it to be very promotional again, and I think we've already started to see this with earlier and earlier sales coming out the door from the retailers. The consumer is still responding very well to value offerings.
Second, we think there is increased competition from multiple categories. In the past, we think apparel was a very givable gift and everybody went to it. Now, we're starting to see strength in other categories, and this year we're really looking for tech and gadgets to be strong as well as things like gift certificates to restaurants.
Third, we think that the consumer is going to continue to demand convenience, and this is where e-commerce really comes into play. So, we expect e-commerce, again, to outpace the in-store growth, and we think that they are going to offer things like free shipping and fast shipping speeds.
So, when you consider all of these factors, the two stocks that we think are going to perform very well this holiday season would be Amazon (AMZN) and TJX Companies (TJX). Amazon offers a very fair deal for very fairly priced merchandise across multiple categories, and it gets the delivery fast. The second would be TJX; they own Marshalls, T.J. Maxx, and HomeGoods. They provide a variety of givable gifts in various categories, again, at that sweet spot of value.