NEW YORK (TheStreet) -- If you think Christmas sales are starting earlier every year, it's not just your imagination. The reality is that a persistently weak consumer spending environment has weighed on many retailers across 2010. Their last hope is for one big push to the finish line that coincides with the holiday shopping season.
Some investors are convinced that this year is going to be a Christmas to remember. After U.S. holiday sales rose about 3.9% in 2009, the idea is that spending will be even better this year now that the financial crisis is even further removed. Others are optimistic about the market in general after the market's typical seasonal rally got off to an early start: After the best September for stocks since 1939, the
has gained 16% since Aug. 31 while the tech-heavy
is up about 21%. Even some Grinches are buying selectively, looking for consumer gems to diversify their holdings.
These companies -- my "11 stocks for Christmas" -- are leading the retail sector this winter. Each has gained 50% or more in the last three months alone:
: Arctic Cat has had trouble breaking through its previous 2010 highs near $15, but once it does, it could be up, up and away. On Oct. 28, Arctic Cat raised its 2011 guidance and changed leadership from its CEO to the No. 2 executive who helped it return to the black after 2008 and 2009 losses. Shares are up more than 50% in the last three months and the stock could really take off on strong winter sales of its iconic snowmobiles and related equipment.
: Yes, CAB stock just gapped up after record third-quarter revenue and its fourth forecast-topping earnings report in a row. Despite new 52-week highs and a 25% run since Nov. 1, the stock may still be a good value, trading at just 12.6 times forward estimates (based on the fiscal year ending January 2012). The hunting and fishing retail giant fell on hard times amid the recession, but has come roaring back recently. A strong holiday showing could give this specialty retail stock another leg up.
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: If you think that Americans are going to give up on fashion and appearances, you've got another thing coming. That means "cheap chic" brands like Coach could be the big winners this holiday season; its goods like leather handbags and accessories are upscale but still within reach. COH stock is up 46% since Sept. 1, and the average Wall Street forecast projects earnings growth of 20% in the current quarter over the year-earlier period.
: Shares of small-cap shoe retailer DSW have soared about 58% since Sept. 1, thanks to strong earnings and a strong outlook. DSW has only about 300 stores, but has been able to see big growth in 2010 thanks to supply agreements with shoe departments at various other retailers such as
. This is a perfect scenario for a favorable holiday shopping season since DSW can capitalize on the scale of its partners but not worry about the risks of managing staffing, inventory and overhead.
: There is a lot to like about this fashion accessories maker. Its third-quarter profit soared 93% on surging sales and margins,
raised its price target and
BB&T Capital Markets
initiated coverage with a buy recently. A $750 million stock-buyback plan announced at the end of August has sparked a three-month run of about 50%. Chances are the company will continue to impress after raising guidance in each of its last two earnings calls.
: Hasbro will see an uptick in share price if it can put together stronger holiday toy sales. But the real potential for HAS stock is in 2011. Hasbro will partner with Reebok on an apparel and footwear line next year based on its wildly popular Nerf line, and is gearing up for a July release date of
that should fuel the toy line of the same name. Shares have briefly rolled back from a new 52-week high set at the beginning of November, so now may be your best chance to get into HAS before the holiday rush.
: This clothing retailer is gearing up for what should be an impressive earnings report on Wednesday., Nov. 17. After Limited saw same-store sales increase 9% for October, it raised its guidance and should make a splash just before Thanksgiving break. If the market sees some seasonal strength and favorable holiday sales, the stock's performance should carry into 2011.
: In October, Nordstrom's same-store sales gained 3.4%, handily topping forecasts. That beat
, which saw 2.5% year-over-year growth, and
, which had a 1.9% gain in October. October was Nordstrom's 14th consecutive month of traffic growth, an inspiring sign as we enter the peak period for mall shopping.
Polo Ralph Lauren
: Polo stock is up 44% since Sept. 1 and the company posted strong fiscal second-quarter earnings. Wall Street had expected profits to shrink, but Polo earnings grew 26% year over year. That's the fourth time running Ralph Lauren has topped forecasts and shows this clothing company is much better off than many think. That's probably because in addition to its premium line it has a Polo-lite line that is sold everywhere from outlet malls to
. Yes, Costco.
: Christmas cards are big business for Shutterfly, as are holiday gifts such as family photo calendars, coffee mugs or mouse pads featuring the grandkids' smiling faces. For the last three years, almost exactly half of the company's revenue came in the fourth quarter. Shutterfly's revenue has been steadily on the rise, from $187 million in fiscal 2007 to $213 million in 2008 to $246 million last year. Another strong holiday season is in the works and investors could ride this trend to more gains on top of the 70% gain SFLY stock has tallied in 2010 to date.
: If you're looking for a retail play for tight consumer spending, look no further than Winmark. The company is the brains behind stores like Play It Again Sports, Platos Closet and Once Upon a Child -- retailers that sell new, used and consigned goods. Not only are pre-owned golf clubs or strollers great buys for the consumers, they are massively profitable with margins that are through the roof. The company's third-quarter profit was up more than 51% -- coincidentally almost the same amount of profits you'd be sitting on if you bought Winmark at the beginning of 2010.
As of this writing, Reeves did not own a position in any of the stocks named here.