'Tis the Season to Purchase These Five Stocks, Barron's Says (WMT, BBY, DLTR, GPS, CHS)

A Barron's article today reports on five stocks that are poised to have a profitable holiday season. These companies have managed to slim down their operations by doing things such as reducing inventory and cutting-costs. This puts the retailers in a good position to pounce if estimates for the season prove to be wrong, and consumers open their purses and wallets wider than expected.

Right now, the National Retail Federation sees a Y/Y sales decline of about 1%, and the National Council of Shopping Centers sees a 1% rise Y/Y. Customer Growth Partners, a Connecticut-based consultant, sees growth of 2.4% year-over-year.

Best Buy (NYSE: BBY) is expected to grow based on their position in the connected lifestyle market. The Company had an inventory-to-sales growth ratio of 84% in the second quarter. This represents that their inventories grew less than their sales did, providing better margins for the company.

Wal-Mart (NYSE: WMT) has an imporoved electronics offering, but the article says that overlap with Best Buy is much less than one would expect.

Dollar Tree (NASDAQ: DLTR) has benefited from a more price-conscious shopper and deflationary pressure on costs. Comps improved 6% while margins increased by 1.66% in the second quarter.

Gap Stores (NYSE: GPS) saw inventories fall 13%, less than the 7% drop in sales. The stock also trades at 15x FY10 EPS estimates, which is below the industry average of 21x.

Finally, Chico's FAS (NYSE: CHS) reduced inventories 9% while boosting sales 4%. The stock is also trading at about 20x FY11 EPS estimates.

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