Goldman Sachs named Amazon and Etsy as top stock picks heading into 2022 holiday season. Analyst Eric Sheridan expects growth will decelerate in the fourth quarter for retailers, as they deal with a longer and more promotional end-of-the-year period than normal. Companies are dealing with the effects excess inventory, and inflation squeezing consumers. Retailers are expected to offer double-digit holiday discounts this year, from 10% to 32%, particularly in electronics and computers, according to the note. At the same time, a greater number of shoppers are expecting sales will figure prominently in their purchases this year, the note read. This comes as inflationary pressures remain high, and the Federal Reserve is expected to tighten monetary policy. The consumer price index rose 7.7% from the year-earlier period in October. While that was slightly below expectations, it remains well above the Fed’s 2% inflation goal. Still, he says some retailers will pull ahead of the crowd. “Amidst this more uncertain backdrop, our Buy-rated stocks in AMZN and ETSY reflect our preference for: a) profitable and scaled players with higher growth profiles, b) resilient models supported by platform breadth, category diversification and more favorable end-market exposure, and c) our expectation of continued market share consolidation within eCommerce,” Sheridan wrote. Amazon is doubling down on its core retail strategy by stocking up on adequate inventory, accelerating delivery speeds, and maintaining competitive pricing levels against competitors. It’s also expanding Prime benefits for consumers. Meanwhile, Etsy is leaning into its differentiated inventory, selling and gifting homemade and affordable products. Etsy sellers have tools to offer more targeted discounts for customers. —CNBC’s Michael Bloom contributed to this report.
