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Our Top Retail Picks for Holiday Shopping

We expect a strong holiday selling period, with Amazon and Mattel among our favorites.

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R.J. Hottovy: With holiday shopping right around the corner, it's time to take make some predictions for the retail sector. While we don't anticipate the strong 5% growth that we saw last year--using National Retail Federation statistics--we believe that most indicators point to a strong holiday selling period, with final results likely to come in ahead of the 4% average growth we've seen the past five years. 

Sales this year should be driven by high consumer confidence, a stable job market, improved wages, a relatively benign inflationary environment, and several notable product cycles such as connected home. Stock market volatility is the one notable risk to these projections, as the higher end consumer that has been the driving force of consumption in the U.S. tends to take its spending cues from the health of equity and housing markets. However, this group has been able to withstand market corrections of more than 10% three times since the Great Recession, and we believe that these consumers will continue to spend this holiday season.

R.J. Hottovy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.