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Santa Puts Apple, Wal-Mart on Rally List

Apple, Wal-Mart and Sport Supply Group are taking advantage of trends in their industries, making them good buys.

NEW YORK (

TheStreet

) -- Looking for the perfect stocking-stuffer stocks for a Santa Claus rally? Let the November advance retail-sales report show you where Santa is shopping this holiday season.

Santa's sleigh last month carried 1.3% more goods than in October, with renewed confidence that American consumers will continue to be good little boys and girls in 2010. Ignoring seasonal adjustments, Commerce Department sled watchers tallied increases of 34% in electronics, 24% at department stores and 16% for sporting goods.

The highest-rated stocks to cover these trends are

Apple

(AAPL) - Get Report

at B-plus,

Wal-Mart

(WMT) - Get Report

at B-plus and

Sport Supply Group

(RBI)

at B.

Santa doesn't have time to make wrong turns. He might sideline Rudolph and equip the sleigh with a navigation system. Santa still keeps naughty-and-nice lists and checks them twice. However, he now keeps them on his smart phone to save countless hours and trees by avoiding the paper scrolls.

Apple has the hottest gift of the holiday season in the iPhone 3GS. With 100,000 applications and more being written for this smart phone every day, it is a product that actually gets better the longer you own it. You can avoid typing and reading by speaking your queries into

Google

(GOOG) - Get Report

Search and using VoiceCorp's ReadSpeaker audioMob Personal to read aloud from Web sites and blogs.

Apple is expected by analysts to generate $2.04 in earnings per share in its fiscal first quarter of 2010 to be announced Jan. 21. That would be the 26th consecutive increase. The stock is off its October high of $208, providing a dip for a better entry price.

Warning: When investing in stocks, you can lose money. Apple is in a lawsuit with

Nokia

(NOK) - Get Report

, the world's biggest mobile-phone maker, over patent infringement. Nokia wants royalties on all Apple iPhones sold in the past two years, and Apple has counter-sued because the best defense is a good offense. A negative outcome could hurt the stock, but in the meantime,

TheStreet.com's

quantitative model is still bullish on Apple.

A smart phone can also be used to save money when shopping using bar-code reading applications. So when you are in a store, you scan the item and your phone tells you where you can get the item for less. Some of the record-high 3.7% of U.S. purchases made online as of the third quarter were done on mobile Internet devices. Now when walking in one store you have the option of negotiating a lower price with the store manager or buy the item elsewhere.

TheStreet Recommends

Wal-Mart is testing a drive-through window concept in Chicago and Minneapolis, and moving service desks to the front of stores to ease pickup of Internet orders. Forty percent of Walmart.com customers avoid shipping costs by picking up purchases at their local Wal-Mart.

Walmart.com is attempting to overtake

Amazon.com

(AMZN) - Get Report

in online sales. Wal-Mart's online sales have grown 22% so far this year, compared with Amazon's 20% pace through the third quarter. Experian Hitwise puts Walmart.com second in holiday retail traffic at 8% to Amazon's 15%. Wal-Mart stock is off its $55 November high.

TheStreet.com's

equity model says "buy."

Sport Supply Group, the largest pure play on sports and recreational equipment and branded, made-to-order team uniforms, is a small company whose forward price-to-earnings ratio of 12.1 is less than its projected growth rate of 13.5%. The stock is up 71% in the past year. More well-known is the company's main brands MacGregor and Voit, plus 20 other private labels made by Sport Supply.

Adidas

,

Nike

(NKE) - Get Report

,

Under Armour

,

Rawlings

and

Wilson

have re-distribution agreements with Sport Supply.

The company is worthy of consideration for its growth potential. Sport Supply boasts factory-direct pricing as a competitive advantage in attracting corporate customers. At less than 5% market share in the fragmented sport-equipment industry, Sport Supply aims to be at the forefront of consolidation in the non-retail segment of the industry.

The company's business is somewhat sheltered from the overall economy as many school athletic programs have dedicated funding from gate receipts and fundraisers. Best of all, on top of the field staff of more than 200 sales reps and 3 million catalogs, this is an e-commerce business taking orders from 20 Web sites, such as

BSN Sports

. Access to capital is a lifeline to small business, and Sport Supply has a $40 million revolving credit line with

Bank of America

(BAC) - Get Report

as a backstop.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.