Which Stock Can Keep Up Its Holiday Sales Streak?

U.S. retailers kicked off the holiday shopping season with a record start, during Thanksgiving weekend -- pulling in $52.4 billion, up from $45 billion a year ago. This week the focus shifted to e-commerce as retail websites offered Cyber Monday deals for a one-day Internet sales event. Let's look at the seven largest online retailers to find out which company has the best chance of sustaining its holiday momentum.

The lineup 
The following companies should continue to enjoy strong sales through the beginning of this week, as shoppers take advantage of in-store deals and online promotions.

Company

2010 Web Sales

Amazon.com (Nasdaq: AMZN  ) $34.2 billion
Staples (Nasdaq: SPLS  ) $10.2 billion
Wal-Mart $4.1 billion
Sears Holdings (Nasdaq: SHLD  ) $3.1 billion
Best Buy (NYSE: BBY  ) $2.5 billion
Costco Wholesale (Nasdaq: COST  ) $1.7 billion
Target (NYSE: TGT  ) $1.4 billion

 Source: Top500Guide.com.

The day after Thanksgiving, known as Black Friday, showed a 26% increase in online retail sales. Amazon led the boost in Web sales, with 50% more visitors to its site than any other retailer, according to comScore.

Amazon, along with Apple (Nasdaq: AAPL  ) , Wal-Mart, Target, and Best Buy, saw double-digit increases of site visitors, compared to the previous year.

Shopping made easy
Staples got a head start this season by offering special deals as early as Nov. 7, including free shipping, which was available for the first time this year. The office-supply company also launched a special mobile website, providing more ways for customers to shop.

Wal-Mart dubbed this week "Cyber Week" in hopes of driving more online sales to compete with top dog Amazon. Meanwhile, Best Buy's strong sales were helped by taking its Cyber Monday deals live Sunday night. Similarly, an enhanced mobile experience and ramped-up website helped Sears stores.

Extended discounts
While all of these retailers saw increased performance online during Black Friday and Cyber Monday, most won't be able to maintain the momentum for long. Only Amazon, Staples, and Target are advertising monthlong discounts.

Target looks promising with its "25 Days of Toys" campaign, which it's promoting on its website. Throughout the season, Target plans to offer more than 2,000 discounts on toys in addition to the offerings in its holiday toy catalogue, with savings worth up to $350. Competitive price-value relationships like these should help Target steal shoppers from other retailers.

Staples.com will feature weekly deals on select merchandise, although it lacks the strong marketing angle of Target's promotions. Amazon is offering Cyber Monday-style daily deals through Dec. 31 on select items.

Say no to delivery charges
According to a survey by consulting firm Accenture, 74% of shoppers said free shipping is the biggest incentive to shopping online. Amazon, Staples, and Target are all providing varying degrees of free shipping this season.

Amazon shoppers who are also Amazon Prime Members receive free two-day shipping on all products. However, Prime membership requires that customers pay an annual fee of $79. The benefit of Amazon's Prime delivery options is that free shipping isn't limited to a single promotional event but is available every day to qualifying members.

Free shipping for Staples, on the other hand, is available only until the end of December and requires a minimum purchase of $25.

Then we have Target, which offers free shipping along with a 5% discount on every purchase when you use your REDcard on Target.com. Unlike with Amazon, you don't need to pay a membership fee to become a REDcard user. And unlike with Staples, there is no minimum order price for free delivery.

Better still, the value shoppers get when they use a REDcard encourages them to shop more often at Target. An increase in returning customers helps Target offset the cost of providing the everyday, every-item discount of 5%.

Shop talk
Impressive results from holiday promotions add further proof that customers are looking for value, regardless of the turbulent state of the economy. In particular, Target's ongoing deals and free shipping choices could draw in value-conscious consumers throughout the shopping season.

For these reasons, I'm giving Target's stock a thumbs-up in My CAPS. While the REDcard provider is the clear winner here, the other top e-retailers I've highlighted should also see favorable returns as the year draws to a close. Track these stocks with My Watchlist, The Motley Fool's free tool.

Fool contributor Tamara Rutter owns shares of Apple and Target. Follow her on Twitter, where she goes by the handle @TamaraRutter. The Motley Fool owns shares of Best Buy, Costco, Wal-Mart, and Apple. Motley Fool newsletter services have recommended buying shares of Staples, Amazon.com, Apple, Wal-Mart, and Costco, as well as creating a bull call spread position in Apple, a diagonal call position on Wal-Mart, and writing covered calls in Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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