Bank of America: These 4 companies dominated Black Friday, and their stocks are a perfect holiday-season buy

Healthy traffic driven by sales in toys, electronics, and grocery boosted the companies, BAML wrote in a Monday note.
Here are Black Friday highlights from each store, and how much upside BAML has priced into each store's stock.
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Amid shrinking Black Friday sales in physical stores , some retailers stood out, analysts at Bank of America Merrill Lynch said.

Four food retailers had healthy Black Friday traffic, according to a Monday note from BAML. The bank has a "buy" rating on the stock of each company, and expects solid gains in the stock price of each going forward.

"We believe strong traffic and compelling deals supported a strong Black Friday" at Target, a team of analysts led by Robert Ohmes wrote.

In particular, toys and electronics sales drove a standout performance at Target, and led sales at other big-box chains on Black Friday as well. Walmart saw healthy traffic in those areas, and is seeing "continued strength in grocery," Ohmes wrote.

Food sales gave Walmart, Costco, and BJ's Wholesale Club a boost. At Walmart, analysts "observed grocery items in most store carts along with other Black Friday purchases," according to the note.

At Costco and BJ's, the analysts also observed healthy traffic in grocery sections. "We believe food remains a significant traffic driver," Ohmes said, referring to Costco. In addition, shoppers also took advantage of other deals offered in stores such as Costco's fuel savings program and BJ's optical program, according to the note.

Here are four companies that stood out on Black Friday, as well as the foreseen upside in stock price, according to BAML.

1. Target

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Adam Hunger/AP Images for Target

Ticker: TGT

Rating: Buy

BAML price target: $140

% upside: 12%

Black Friday highlights :

"As expected, toys stood out, with an expanded assortment featuring 10,000+ new & exclusive items (vs. 2,500 LY)," Ohmes wrote Monday.

He continued: "TGT also rolled out Disney 'shop-in-shops' to 25 select stores this year (featuring 450+ items incl. 100+ items previously only available at Disney locations)"

"Seasonal, home (which featured 2,000+ new & exclusive items), apparel, and beauty categories also showed momentum and had Door Buster/sale options and gift-focused displays."

2. Walmart

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Gunnar Rathbun/AP Images

Ticker: WMT

Rating: Buy

BAML price target: $150

% upside: 27%

Black Friday highlights:

"Toys stood out as well, with WMT's America's Best Toy Shop featuring 1,300+ items this year (incl. 500+ exclusive toys - a 20% increase from last year)," Ohmes wrote Monday.

He continued: "We also saw improved signage in stores & interactive store navigation available on WMT's app, as well as 'Check Out With Me' associates (available in all WMT Supercenters) located in key areas of stores that appeared to help minimize Black Friday checkout lines."

3. Costco

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AP Photo/Rick Bowmer

Ticker: COST

Rating: Buy

BAML price target: $320

% upside: 8%

Black Friday highlights:

"Several compelling Black Friday deals (valid 11/29-12/2) were featured at the front of the club, including deals on TVs (Samsung 65" 4K UHD for $779.99), Microsoft Surface Pro 7 Bundles ($800 vs. $1,000 regular price), and Series 5 Apple Watches ($30 off)," Ohmes wrote.

He continued: "We believe COST likely benefitted from rising adoption of the Costco co-branded Visa card as well as early Black Friday online only deals on 'Members Only' items (such as Samsung & LG UHD TVs, Microsoft Surface Pro Bundles, & Samsung Galaxy Tabs) to drive traffic to Costco.com."

4. BJsWholesale Club

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AP/Stephan Savoia

Ticker: BJ

Rating: Buy

BAML price target: $30

% upside: 27%

Black Friday highlights:

"We also observed healthy traffic in BJ's optical service, with BJ featuring a special promotion for free lenses on any purchase of frames over $120," Ohmes wrote.

He continued: "Black Friday deals were also available online, and BJ offered free shipping to all members on orders over $75 throughout the holiday season (11/14-12/24)."