Morgan Stanley Unwrapped Macy's As A Top Pick: Here's Why

A Morgan Stanley report this week provided some early real-time feedback on this holiday shopping season, and the data looks good for investors.

The Number

Morgan Stanley’s AlphaWise Real-Time Department Store Sales Tracker indicates a 1.6 percent increase in sales year-over-year for the month of November.

This growth in November comes on the heels of months of decline and could be a sign that times are getting better for retailers in the short-term. These promising retail sales projections come just days after Morgan Stanley released apparel discounting numbers for November that are very similar to last year.

Related Link: Macy's Tech Attracts Shoppers

Implications For Investors

In the past, when the AlphaWise Sales Tracker estimate has been above 1 percent growth, the S&P 1500 Department Stores typically show an average gain of about 1 percent over the following two-week period. The AlphaWise data suggests that strong early November sales indicated in-sector conference calls continued for the rest of the month.

Morgan Stanley analysts choose Macy’s, Inc. M as their recommended stock pick from the sector.

These analysts believe that Macy’s likely performed very well on Black Friday and has benefitted overall from cool weather in the month of November.

“For Macy’s, easy comparisons, compelling strategies, and superior, omni-channel capabilities should lead to Q4 outperformance, in our view.”

Morgan Stanley maintains an overweight rating for Macy’s stock.