Summer flew by and the holiday season is fast approaching. This is the time when businesses gear up for the make-or-break season of their business.
Companies that enjoy a boon in consumer spending over the holiday period often fall under the umbrella of seasonal stocks, ones that move cyclically during the year with somewhat predictable moves higher and lower.
Some top seasonal stocks with historical track records of popping at around the same time each year include these six firms:
1. Target Has A Fairytale Ally
Target Corporation (NYSE:TGT) went on a hot streak the aftermath of the pandemic, outperforming rivals like Walmart (WMT) and Kohls with streamlined ecommerce and curbside pickup. In-house brands and home furnishing fueled double-digit revenue growth and about a 3x return from the lows below $100.00 per share.
In the first pandemic holiday season, Target (TGT) grew year-over-year sales by 156 percent during the crucial November sales rush. And it has a “major ally” in store for this year’s holiday season – Disney (DIS).
Target is nearly tripling the number of Disney shops within its stores to over 160 by year end. It’s part of the company’s transition to become a mall-like destination, complete with shops like Ulta Beauty (ULTA), CVS Health (CVS), and Starbucks (SBUX).
It’s a key strategy that should keep holiday shoppers coming in through New Year’s Day. The company’s $3.60 annual dividend and consistent quarterly payouts also make it an attractive buy, and it’s not the only retailer succeeding with both a digital and brick-and-mortar footprint.
2. Best Buy Competes On Price & User Experience
Best Buy Co Inc (NYSE:BBY) was a long-shot to survive Amazon’s culling of brick-and-mortar retail until the company turned itself around in the late 2010s. It did so by taking care of its employees, keeping costs highly competitive, and fixing broken aspects of its structures and systems.
Management’s willingness to adapt also helped the company to maintain an edge in the showroom. Unlike an Amazon purchase, customers can compare options side by side, touch and feel them, yet still pay competitive costs.
BBY’s employee discount and training programs are the stuff of legend. High value customers are rewarded with incentives that effectively “gameifies” the purchase of more electronics and other inventory.
BBY share price dropped over 10 percent after the 2020 holiday season sales performance disappointed investors. That proved to be a temporary dip as it rebounded through this year on the back of strong sales.
In the most recent quarter, the company reported a 20 percent year-over-year increase in enterprise sales at $11.84 billion. This hot streak may cool, but there’s still plenty more juice to be squeezed.
3. Albertsons Stock Has Been Unstoppable
Albertsons Companies Inc (NYSE:ACI) was founded nearly a century ago, but it didn’t go public until the pandemic hit in 2020.
Since then, ACI share price has nearly doubled. This one-time Buffett favorite heads into the holiday season with a lofty $12 billion valuation yet many analysts believe it’s still undervalued. $20 billion in annual revenue might suggest they are right but a discounted cash flow forecast would recommend buying on a pullback with fair value currently pegged at $25 per share.
Like its retail counterparts above, this grocer stayed relevant through a mixed digital/analog approach. The firm’s Safeway stores are known for eschewing self-checkout to provide personal service strengthened by its mobile apps.
Its most recent quarterly report didn’t stop the share price from popping. As people ate out more often and bought fewer groceries, year-over-year revenue dropped 6.51 percent to $21.27 billion, but expect top line revenues to bounce back as consumers stocks up for the winter and buy for holiday feasts.
4. TJX Laser Targets Budget Conscious Shoppers
TJX Companies Inc (NYSE:TJX) is a discount department store giant that employs 320,000 people across its portfolio stores, which includes TJ Maxx, HomeGoods, Marshalls.
Holiday shopping should provide the brand a boost this winter across its core audience of budget-conscious consumers.
In a surprise twist that goes against the general trend, the company has largely avoided e-commerce as a sales channel. That doesn’t seem to be hurting its top line. For fiscal year 2022 second quarter sales of $12.1 billion represent a 23 percent year-over-year increase. And it historically performs at least as well as (if not better) than rivals like Walmart (WMT) and Target (TGT).
What will really determine the company’s success is how consumers spend on holiday decorations. Pandemic-weary customers bought more holiday decorations last year, but there’s no telling if that trend will continue this year.
5. Apple Revenue Still Growing 21% YoY
Apple Inc (NASDAQ:AAPL) is always prepared for the holiday season. Every summer, it holds its WWDC event, where it announces all the latest releases for its iPhone, iPad, Mac, Beats by Dre, and other products. It keeps things going with a fall event that sparks sales in time for Black Friday and Cyber Monday.
In the holiday 2020 quarter, the company’s $111.4 billion revenue was a 21 percent increase from the same quarter in the prior year. And this year promises to be even better, as the company releases its latest iPhone that connects to satellite when cellular coverage is not possible.
And it’s not just hardware the company sells – this year, it introduced a News Partner Program to support journalism and expanded its Student IDs app support across the U.S. and Canada. It also pays a regular quarterly dividend that will total $0.88 this year.
Consumers should flock to the multi-trillion-dollar company’s latest releases, which include a new iPhone, Apple Watch, and AirPods.
6. Amazon: A $2 Trillion Giant?
Amazon.com, Inc. (NASDAQ:AMZN) is the trillion-dollar juggernaut in the room when it comes to holiday shopping. First, it dominated traditional brick-and-mortar retail, and then it shifted the biggest sales day of the year from Black Friday to its own Amazon Prime Day in July.
Still, it’s a dominating force during the holiday season too, increasing net sales by 44 percent to $125.6 billion in the fourth quarter of last year. This fueled the company’s $7.2 billion in net income for the quarter.
Analysts expect it will be another banner year for the e-commerce giant, which could well mushroom to $2 trillion market capitalization in the near future. This could finally push it above the technical ceiling where it struggled to break above over the past year and make it a holly jolly Christmas for investors.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.