25 Best Retail Stocks to Buy Before Black Friday

KMX is among the best retailers to own during November-December, historically

by Emma Duncan

Published on Nov 7, 2018 at 1:03 PM

Keeping specialty retail stocks in focus ahead of the holiday season, today we will switch gears from the 25 worst retailers to eye before Black Friday, to the top 25 retailers to own, if history is any indicator. Specifically, used vehicle retailer CarMax, Inc (NYSE:KMX) has historically been a smart choice for bulls during the shopping season.

According to Schaeffer's Senior Quantitative Analyst Rocky White, CarMax has been one of the best retail stocks to own from November through the end of the year, looking at data from the past 10 years. KMX has averaged a two-month gain of 3.79%, with at least seven of 10 returns positive. 

Best Retailers Nov to Dec 2018

On the charts, CarMax stock has been at a standstill since early October, unable to break above the $72 level and 160-day moving average. However, the stock seems to have found support in the $67 area, and has remained above its year-to-date breakeven of $64.13. KMX was last seen 3.5% lower at $67.96. Another rally this holiday season could put the shares north of the 160-day trendline.

Daily KMX with 160MA

In the options pits, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), shows the car retailer with a 10-day put/call volume ratio of 1.22, ranking in the 76th percentile of its annual range. In other words, traders have been leaning bearishly, with puts purchased over calls at a faster-than-usual clip during the past two weeks.

Regardless, analysts have been optimistic toward the security. This is evident by the majority 10 of 14 covering analysts sporting "buy" or better recommendations on the stock, plus KMX's average 12-month price target of $86.23 representing 27% upside from current levels.

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