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Three Holiday Retail Plays

Holiday sales appear to have been more robust than many expected. Here are three equities for betting on the sector.

NEW YORK (TheStreet.Com) -- Recent data indicate that U.S. retail sales rose 3.6% from Nov. 1 through Dec. 24 as many loosened the grip on their wallets and spent a couple of extra dollars during the holiday season.

Meanwhile, the International Council of Shopping Centers expects final holiday sales numbers to increase by 1% from last year and sales numbers for the month of December to jump 2%. Improving consumer confidence, increases in disposable income and the loosening of credit markets are all positive forces that should support a favorable trend in the sector.

In fact, a survey conducted by Change Wave Research indicated that 25% of consumers were expecting to spend more money this holiday season than last. This expected boost in revenues, combined with lean inventories and cost-cutting measures by many merchants, is likely to add to retailers' bottom lines.

Of all retailers, online merchants and electronics retailers are expected to do best. Electronics seem to always be a hot ticket during gift-giving times, and the inclement weather this year prompted many shoppers to make their purchases on the Internet.

With this in mind, here are some retail equities to consider:

Amazon

(AMZN) - Get Report

, up 181% from a January low of $48.44 to close at $135.99 on Wednesday.

Best Buy

TST Recommends

(BBY) - Get Report

, Best Buy (BBY), up 63% from a March low of $24.71 to close at $40.31 on Wednesday.

Retail HOLDRs

(RTH) - Get Report

, which is up 55% from its March low of $61.26 to close at $94.93 on Wednesday. This exchange-traded fund enables one to gain exposure to both Amazon and Best Buy.

When investing in these equities it is important to consider the inherent risks involved. To help mitigate these risks, the use of an exit strategy is important. According to data at

www.SmartStops.net

, an upward trend in the previously mentioned equites could come to an end at the following price points: AMZN at $128.00; BBY at $39.28; RTH at $91.69. These price points change on a daily basis as markets fluctuate and updated data can be found at www.SmartStops.net.

-- Written By Kevin Grewal in Laguna Niguel, Calif.

At the time of publication, Grewal had no positions in stocks mentioned. Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at SmartStops.net where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.