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First Cut Stocks Stocks

Holiday Preview: Stocks That May Benefit From Seasonal Spending

Companies that might benefit from approaching holiday spending, include well-known companies and many that are the largest in their respective industries.

by Cynthia McLaughlin | November 2023

Featured Tickers:

Thanksgiving is still a few weeks away but planning for the holidays and holiday shopping is in full swing. The November issue of the AAII Journal traditionally features a First Cut that highlights stocks that might benefit from increased holiday spending.

Airlines, brewers and food retail and distribution were included along with online services, restaurants and toy manufacturers. Traditional department stores, discounters and computer retailers are synonymous with holiday spending. All are well-known companies, and many are the largest in their respective industries by market capitalization. Alphabet Inc. (GOOGL) makes an appearance in this First Cut because the firm is heavily marketing and seeing interest in its Pixel electronic brand. Both Visa Inc. (V) and Mastercard Inc. (MA) stand to benefit from increased transaction volume. Starbucks Corp. (SBUX) offers “must have” holiday beverages that we look forward to all year. Darden Restaurants Inc. (DRI) is a popular family gathering place for crowd-pleasing fare and McDonald’s Corp. (MCD) could benefit from increased shopper traffic. Hasbro Inc. (HAS) and Mattel Inc. (MAT) are toy and game bellwethers. Mattel could ride the popularity of Barbie on the heels of the summer blockbuster movie.

Twenty stocks are included in the First Cut list, and they are ranked within their industry from low to high by their forward price-earnings (P/E) ratio, which divides the current stock price by the consensus earnings estimate for the company’s current fiscal year and provides a rough idea of the expectations priced into these stocks. Only stocks with a positive forward price-earnings ratio and a consensus earnings estimate for the current year were included.

Holiday-Themed Stocks (Grouped by Industry and Ranked by Forward Price-Earnings Ratio)

A short-term picture of earnings stability and growth is provided by the annual earnings per share for each of the last two years. The five-year earnings growth rate gives a longer-term perspective of bottom-line growth, while the sales growth rate does the same with strength in the top line of the income statement.

Discussion

JOHN L from NJ posted over 2 years ago:

The stock market has already anticipated and priced in the seasonal spending that happens during the Christmas season! It is so widely known that this article and analysis is of no use to an investor.


ROBERT A from NC posted over 2 years ago:

I wouldn't invest in a company based on what I thought it might earn next Christmas. That's short-term thinking that almost always leads to diminished long-term returns.


Robert R from TX posted over 2 years ago:

Short term plays on these Christmas presents (so to speak) are dubious - January basically ends the party and then everything is usually downhill from there. None of these stocks look appetizing this year, especially airline stocks and retail.


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