What to Watch: Eyes on the consumer

'Twas the month before when investors find out how retailers really did during the holiday season. But this week, investors get a taste of what retail sales were looking like coming into this pivotal time.

Late this week, investors get retail sales statistics from November and an indication of how shoppers were feeling in the month ahead of the busiest season of the year for many retailers. Investors aren't looking for much - practically flat growth - but will be unnerved if November was shakier than expected.

Investors are in a bit of a holding period with retail stocks as consumers still have a few weeks to wrap up their shopping and data is scarce. So far, investors aren't all that optimistic. Retail stocks are down an average of 1.6% since Black Friday kicked off the holiday season, based on stocks in the retailing and foods and staples retailing industries in the Russell 1000 index, according to data from S&P Capital IQ.

While investors seem to be holding back their enthusiasm for retail stocks, analysts still think there is profit potential from the consumer. Analysts are calling for 7.7% adjusted earnings fourth-quarter growth from the consumer discretionary sector which includes retailers, says S&P Capital IQ. That is the second-highest expected growth rate among all 10 industry sectors, only behind telecom at 18% expected quarterly profit growth. But to put expectations into perspective, retail profit growth in the fourth quarter of this year is still below where it was last year at 13%.

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