3 Stocks to Buy Ahead of Black Friday

By Tamara Walsh, Rich Duprey, and Daniel B. KlineFool.com

The day after Thanksgiving, known as Black Friday, is one of the most anticipated shopping days of the year in the United States. This year, the stakes are high for brick-and-mortar retailers amid increased competition both in physical retail stores and online. To help you sort the potential winners from the losers, three Motley Fool contributors explain why Chipotle Mexican Grill , Target Corp. , and Best Buy are worthy investments ahead of Black Friday and the holiday shopping season.

Rich Duprey (Chipotle Mexican Grill): Battling the crowds to get that last My Friend Freddy plush toy causes shoppers to work up a mighty appetite. According to the MasterCard Advisors SpendingPulse report, along with estimates of cash and other forms of payment, dining establishments enjoyed some of the strongest sales growth year over year in 2014, registering double-digit percentage gains between Black Friday and Christmas Eve.

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Investors may want to take a close look at Chipotle Mexican Grillbefore the holiday shopping extravaganza begins in earnest.

Although its latest earnings report underwhelmed investors and it got whacked by an E.coli bacteria outbreak in the Pacific northwest, the Mexican food chain has lost nearly 20% of its value over the past few weeks and its current level may make a good stocking stuffer for your portfolio.

First, there's been no link found so far between Chipotle and the bacteria outbreak so the restaurants that were closed in the aftermath are set to reopen soon. Because the chain generates a high level of trust from its customer base due to its commitment to Food with Integrity, the lasting impact of this episode won't be long, certainly nothing compared to what happened to Yum! Brands with its food-quality scares in China that took over a year to recover from.

Earlier this year it severed relations with a pork supplier after it failed to meet its standards even though that resulted in a carnitas shortage at many of its restaurants. Customers over profits resonates with the dining public, and though the store closures will have an impact on fourth-quarter earnings, their depressed value yet preeminent position in the dining space suggests it could be an opportune time to pick up shares on the cheap.

Tamara Walsh (Target): Black Friday, which used to mean in-store deals and doorbusters, now extends to online sales. This means retailers with well-rounded sales strategies that include mobile, online, and brick-and-mortar will most likely reign supreme. Enter big-box store Target. In addition to its many in-store promotions, the retail chain also plans to offer all of its Black Friday deals online as well as Target.com. While this may cause some customers to skip the store and shop from home instead, it should result in an overall spike in Black Friday sales for Target.

Image source: Target.

The discount retailer is also getting a head start over other retail chains that choose to close for Thanksgiving. Not only will Target be open on Turkey Day, but it will also give consumers a chance to shop a "Black Friday presale" on Nov. 25 -- two days early. Target isn't leaving anything to chance this year. The company has already released its Black Friday preview both online and on its mobile app, thereby giving shoppers nearly two weeks to prepare for the now-multiday event.

To further sweeten the deal for Black Friday shoppers, Target said it would offer a 20% discount to customers who spend $75 or more on Friday, Nov. 27. Customers can apply that additional discount to any future purchases between Dec. 4 and Dec. 13 -- a smart move that should result in repeat visits and orders.

Target's multifaceted retail strategy heading into the holidays promises to make it a big retail winner. Shares of Target look reasonably priced today trading just north of $74 apiece or around 1.7 times earnings growth. For that reason, I plan to add to my position ahead of the Black Friday shopping spree.

Daniel B. Kline (Best Buy):The fact thatBest Buyeven exists heading into this holiday season is a tribute to CEO Hubert Joly. By aggressively bringing costs under control, rolling out innovative store-within-a-store concepts, and matching prices from rival retailers, the CEO not only stopped the bleeding, he has made Best Buy relevant again. He celebrated that a bit when the company announced its Q2 results in August.

"We believe these better-than-expected second quarter results are affirmation that our strategy of offering advice, service and convenience at competitive prices is paying off," he said.

Joly aims to build on that momentum in the fourth quarter by breaking from tradition. Instead of building around the recent tradition of focusing sales on Thanksgiving night and Black Friday, the company kicked off its holiday promotion by offering eight deals on BestBuy.com starting Nov. 10. These include up to $125 off iPad Air 2, a Toshiba 55-inch LED TV for $349.99, deals on iMacs and MacBooks, and more.

That should give the company a jump on the holiday season and help it start adding to its sales totals before some rivals have even kick off their promotions. Best Buy is not alone in doing this, but it's one of a select few companies extending the season. In the electronics retailer's case it's a smart move that might lessen the pressure on Black Friday. It also likely opens its sales up to a new type of deal seeker -- people who don't want to fight Black Friday crowds to buy expensive high-tech devices.

Of course, Best Buy isn't entirely giving up Black Friday. Nearly 1,000 Best Buy stores in 47 states will open at 5 p.m. on Thanksgiving offering "doorbuster" deals. Nearly all stores will remain open until 1 a.m. local time on Friday, Nov. 27, and reopen for a second round of "doorbuster" deals at 8 a.m. and new deals will be offered throughout both days.

This multitiered strategy should help Joly's company continue to build on the momentum that has led its stock price to recover. It should also show that the Best Buy revival is not a short-term thing. The CEO has rebuilt the brand from the ground up and it looks set up to compete.

Data source: YCharts.com.

The article 3 Stocks to Buy Ahead of Black Friday originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. Rich Duprey has no position in any stocks mentioned. Tamara Rutter owns shares of Target. The Motley Fool owns shares of and recommends Chipotle Mexican Grill and MasterCard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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