What Stocks Go Up For Halloween 2023?

It’s no surprise that candy stocks are in vogue around Halloween but it turns out there are other companies that enjoy the tailwinds from the spooky night too.

Let’s dive into which stocks have great seasonal trends over the next few weeks as well as which ones are best to buy for Halloween if historical trends continue.

Does Halloween Affect The Stock Market?

Certainly, some stocks do react to Halloween but the overall stock market is not particularly impacted by the day. In general, any companies selling goods that are in high demand to consumers around the night of ghouls and ghosts enjoy tailwinds. 

One very interesting play is JM Smucker (NYSE:SJM), and it’s for reasons that won’t be obvious to most.

You see, JM Smucker acquired Hostess Brands (NASDAQ:TWNK), which had an 85.7% seasonal track record of rising between October and December, meaning that since inception it had almost always risen during that window of time.

It remains to be seen whether that supporting seasonal trend extends to JM Smucker this year.

Perhaps the most famous of all candy stocks that typically sees investors buy it ahead of Halloween is Hershey Co. (NYSE:HSY).

Year-to-date, Hershey has been a poor performer, down by 13%, but the last six months has been nothing short of dreadful following a share price slide of 24%.

Like Hostess Brands, Hershey has a pretty decent track record in the fourth quarter with an average upswing of around 3%. It’s good, though not stellar. Still, ahead of Halloween, it’s perhaps the most obvious choice for investors to bet on a pop.

A close second is Tootsie Roll (NYSE:TR), which has, on average, risen by 5.17% over the final quarter of the year. 

Both are attractive choices, not just for Halloween, but for the surge in demand for chocolates and candies over the holiday period.

Between the two, however, Tootsie Roll has the better track record, even if Hershey has the more established brand.

What Companies Profit From Halloween?

A laundry list of companies profit from the Halloween buying rush to place goblins and pumpkins around homes, and prepare for trick or treating kids. Among them are brand name retailers, like Target (NYSE:TGT) and Walmart (NYSE:WMT), as well as discount goods stores like TJX Companies Inc. (NYSE:TJX).

So too do other conglomerates profit from Halloween, including an old Warren Buffett favorite, Mondelez International (NASDAQ: MDLZ).

Interestingly, most of these companies have really struggled over the past few months as rising interest rates have increasingly acted as a sieve on consumers’ wallets, encouraging spending cutbacks on discretionary items like chocolates and sugary treats.

The share price declines, in some ways, are a positive for these companies as Halloween and the Santa Claus rally season approach because valuations are significantly more attractive.

Which Stocks Have Upside Ahead Of Halloween?

Take Mondelez, for example, which analysts rate highly with an $81 per share price target while a discounted cash flow forecast puts fair value closer to $77.96. The former would result in upside of 29.7% while the latter would lead to a pop of as much as 23.4%, if realized.

Mondelez also pays a relatively generous dividend of 2.68% and has raised its dividend for 9 consecutive years.

Hershey

Similarly, Hershey may be a bargain for value investors at this time, having slid into red territory this year. The fundamentals remain attractive with one metric in particular standing out, return on invested capital.

Hershey’s brand advantage is evident in its ability to generate a 23.6% ROIC.

Usually ROIC trends towards the cost of capital over time but to sustain a figure that’s more than twice the average figure of S&P 500 stocks suggests Hershey has a sustainable competitive advantage that its rivals can’t easily overcome.

As an aside, TJX also has a remarkably high ROIC of 20.4%, implying it too has a wide moat that other retailers have failed to penetrate in any meaningful way.

Tootsie Roll

We turned our attention to Tootsie Roll also to evaluate its financial prospects, and again we were pleasantly surprised to see some decent upside potential.

By our calculations, intrinsic value for Tootsie Roll sits at $38 per share, translating to 24.6% upside opportunity.

With upcoming seasonal and fundamental forces in favor of these stocks, you might be wondering whether a monthly October headwind could negate the Halloween tailwinds.

Is October a Bad Time For Stocks?

There is no doubt that October gets a bad rap among investors because some of the worst days in stock market history have come then. Whether it’s the 1987 Black Monday Crash or the 1929 Stock Market Crash, October has seen the worst drawdowns in history.

Nonetheless, it’s not the worst month of the year. That dubious honor goes to September. So, for investors looking to bet on a bullish Halloween for stocks, the odds start to lean in their favor as we get closer to the bullish Santa Claus season.

It must be noted, though, that structural flows from options hedging tend to produce a window of weakness in the last week of the month, and so conservative investors may wish to hang tight until the first or second weeks of November, when the end of year rally starts to gather momentum in greater force.

Wrap Up

Seasonal trends in the stock market are especially strong around the mid-November through early January period. The overall stock market doesn’t tend to react meaningfully to Halloween, however.

Nonetheless, certain stocks tethered to consumer behavior will typically experience inflows in anticipation of a spike in demand. 

Candy stocks like Hershey, Tootsie Roll and Mondelez are among the most popular beneficiaries while retailers such as Walmart, Target, and TJX tend to see short-term purchasing spikes too.

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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.