Buy early and these stocks can add some Christmas magic to your portfolio, says ANNE ASHWORTH

The lights of Oxford Street and Regent Street have been switched on in London, sequined dresses sparkle in shop windows and supermarket television food adverts have been unveiled to whet the appetite for turkey and a myriad of sweet and savory delights.

It’s starting to look a lot like Christmas, which means attention is turning to the prospects for retailers’ stocks.

Will the holiday season results leave shareholders with a warm glow or prove a disappointment? Will Black Friday discounts ruin the party?

Eclipsing fun will be the big budget hit for retailers.

Their costs are expected to soar into the millions as a result of rising employers’ national insurance contributions and increases in the minimum wage.

Price hikes in 2025 appear inevitable, a prospect that has weighed on retail stocks in recent days. But, for the moment, the attention of the big names on the street is on the operations of the coming weeks.

Mamta Valecha, of wealth manager Quilter Cheviot, says that while consumers may remain value-conscious, “they are willing to spend on novelty and innovation.”

As a result, expect a rebound in demand in time for Black Friday on November 29 and Christmas.

This assessment suggests that retailers willing to take steps to surprise and delight could be the names to back this season.

Among those who study trends in this sector, there is a lot of talk about the “modern mainstream consumer,” people of all demographic groups who eschew frumpiness and want quality and an extra helping of style. Pleasing these buyers is the path to more sales.

Stuart Machin, chief executive of Marks & Spencer, is cautiously optimistic about his customers’ willingness to part with their money for these and other more traditional products. This week it reported a rebound in pre-orders for all holiday food.

The party dresses of M&S muse, actress Sienna Miller, and the collection of designer Bella Freud have also attracted attention: 9,000 jumpers from this range were sold in just two hours, underlining the desire for something a little different.

On Wednesday, Machin revealed a 17.2 per cent rise in half-year profits to £407.8 million, a figure well above analysts’ expectations.

He said: “We are well prepared for Christmas – with our best range of food.”

Machin’s sense that the country could be prepared to spend more this year echoed last month’s message from FTSE 100 retailer Next, which said improving consumer confidence was boosting sales.

Even embattled fast fashion firm Asos reports that shoppers are being attracted by the “newness”, although this may not be enough to revive the stock which is trading at 365p, down from its high of 7,630p in spring 2018.

This brighter mood may be partly due to the downward trend in interest rates.

But it is also the consequence of the Budget not having put pressure on the majority of taxpayers.

Chris St John, portfolio manager at AXA Investment Managers, said: “The Budget has put most of the work on businesses by increasing employers’ national insurance.”

Among the beneficiaries of the minimum wage increase ordered by the Budget should be ABF, the Primark group.

ABF share price has fallen this year to 2,260p, but analysts rate the stock a “hold” with a price target of 2,529p. In this new environment of greater free spending, buyers’ budgets will not necessarily be much larger, as Chris Beckett, head of equity research at Quilter Cheviot, explains. But they will be willing to pay more for quality.

He argues this should be good news for supermarket giants M&S, Tesco and Sainsbury’s, which are adapting to offer more upscale dishes.

If you’re thinking about including these companies on your Christmas investment shopping list, you might think that such has been the rise in the M&S share price that further profits are unlikely to be realized.

However, analysts believe the stock needs to continue rising as the company’s recovery accelerates. At the end of 2022, the year Machin was promoted to the top job, M&S shares could be bought for 90p.

They have risen to 376p, about 230 per cent higher than their price two years ago, when they appeared in this column. I’m still glad I made my own bet on the stock at the time – the gift it continues to give to myself.

The average analyst price target is 400p. But Peel Hunt predicts 425p. UBS has set a target of 465 pence.

Ian Lance of investment fund Temple Bar, which has a stake in M&S, says the stock has “considerable growth potential” and a price of 500p would not be unreasonable.

Ken Murphy, Tesco’s chief executive, said last month that shoppers were “in good shape” ahead of Christmas. Britain’s largest supermarket is satisfying the desire for something more special by investing in its Finest range.

Since January, tesco stock have risen 18 per cent to 345.3p.

But the likelihood of further transformation at the £24.3bn giant means analysts see room for further upside in the shares, with an average price target of 392p.

I continue to maintain my small stake in Tesco in the hope of gaining greater appreciation.

Sainsbury’s performance this year has been less appealing although it has been making progress in its renovation.

Profits fell after the sale of its banking division and other business restructurings. Since the start of the year, shares in the chain, number two in the grocery league, have fallen 17 per cent to 250p despite an 18 per cent rebound in sales of its premium Taste the Difference range.

But at this level it represents a cheap bet for consumers to opt for, and the dividend yield is an attractive 4.89 percent.

There are 46 shopping days left until Christmas. But the first test of the nation’s desire to loosen the purse strings will come on Black Friday, when upgrading laptops, phones and televisions has become a tradition, when optimism reigns.

Shares in Currys, The electrical retailer’s prices have soared 60 per cent to 81p this year amid belief that shoppers will become slightly happier.

Analysts seem convinced that this will be the result. They rate the shares a “buy”, with an average price target of 102p.

Change has become the watchdog on the high street, and even stock market darling Next is undergoing changes as it becomes a more international player, selling its own brand and dozens of others around the world. world.

A small portion of shares of this highly successful retailer is on my investment shopping list.

Some weakness in the share price would be a bonus, but sometimes you have to pay for quality.