There's no two ways about it: 40,000 jobs in retail have been lost this year. We might see a seasonal surge in numbers here shortly, but I don't think it will have staying power.
In fact, retail could still do worse – much worse – with more of these companies closing more of their stores. Macy's is closing 15% of their stores – one of the so-called mall "anchor" stores, along with other troubled names like Sears, Nordstrom, and JC Penney.
Morgan Stanley agrees with me, and it says the pain for Macy's and Nordstrom is NOT over.
That's a profit opportunity in and of itself, but I want to make the most possible money from the upcoming shopping season right now.
I've got shopping of my own to do, after all.
The way I see it, this is the best way to do that…
The Only Retail Stocks to Play Right Now
There are two companies to play here – you can play either or both; these guys are both in the same league.
They're Amazon.com Inc. (Nasdaq: AMZN), of course, and I'd put Chinese e-commerce giant Alibaba Group Holding Ltd. (Nasdaq: BABA) up there with them. These companies are dominating the retail sector and commanding the lion's share of American and Chinese online shopping dollars (and yuan).
Online shopping was responsible for 7.4% of all retail spending in 2016, and there's every reason to expect 2017 to be even bigger. Heck, by 2018, online is expected to take nearly 9% of all retail spending.
And even though other "traditional" retailers, like Wal-Mart Stores Inc., are beefing up their efforts to sell online, Amazon is still the online retail behemoth most responsible for their declining sales and traffic.
Amazon is relentlessly innovative in its approach, and with the new Alexa and with its Dash buttons (which allow consumers to reorder their favorite products over and over), Morgan Stanley expects them to be able to capture 35% of all U.S. e-commerce sales in the fourth quarter.
Morgan Stanley's also estimating that Amazon accounts for half of all U.S. retail growth, up from just 17% in 2013.
Alibaba's story of its rise to dominance in China is very similar. Visionary leadership, a hardcore, innovative culture, and a willingness to do almost anything to kill the competition have put it in the same class as Amazon.
About the Author
Tom Gentile is one of the world's foremost authorities on stock, futures and options trading.
With more than 25 years' experience trading stocks, futures, and options, Tom's style of trading systems and strategies are designed to help individual investors propel themselves past 99 percent of the trading crowd.