Looking to get into some new stocks before the end of the year? Be careful what you purchase—the Christmas season makes the market operate unlike it does throughout other parts of the year and is a unique economic phenomenon.
The holiday season coincides with the highest-return three months of the year, but not every stock brings a guaranteed return. To take advantage of holiday trends, consider the best and worst stocks to own for the Christmas season:
Look for stocks that will perform well throughout the holidays and into the new year. In general, look for companies that are thriving, popular, and busy. If a certain store or business is always busy around the holidays, it’s a good sign that their sales numbers will be strong.
The market tends to perform well at the beginning of the year, and manyconsider a stock’s January performance an indication of how it will do the rest of the year. Historically, the stocks that have the biggest price increases around Christmas and the new year are small-cap companies.
Alphabet Inc (GOOG)
Google and its parent company have long been on the cutting edge of technological innovation, but it has increased its product load lately. Its newest products include Nest connected security cameras and thermostats and other smart home products, including Google Home, Google Assistant, and its own smartphone, Google Pixel. These products have received positive reviews so far, which bodes well for their future growth in the ever-increasingly popular smart home market.
Transportation companies are at their busiest during the holiday season, and late gifts and returns keep the rise going through the beginning of the new year. FedEx is a steady performer throughout the year, and it almost always enjoys a large lift around the holidays. Purchase at the right time before the price gets too high to enjoy a large reward.
When it comes to holiday shopping, Amazon is king. E-commerce is a growing part of Christmas sales, increasing 20% in 2015,in brick-and-mortar stores. In 2016, online retailers are expected to sell nearly $95 billion, the highest Christmas growth rate since 2011. Of those record sales, Amazon is estimated to account for one quarter, meaning there is lots of money to be made by owning this promising stock.
In general, avoid stocks of companies that are going through a re-branding or that seem to be outdated. If you think a company is becoming obsolete, chances are other customers will feel the same way, which will lead to weakened Christmas sales. Don’t be fooled by companies that seem to be enjoying small increases during the holidays—look at their next year projections to get the full story.
Although it had one of the hottest products just a few holiday seasons ago, GoPro has taken a major fall lately as demand for its. GoPro has a lot riding on its holiday sales, which doesn’t bode well for the rest of the year and puts a lot of pressure on the company to perform in a competitive market.
Abercrombie & Fitch (ANF)
After a rough third quarter, Abercrombie’s rebranding efforts are hitting at just the wrong time for holiday sales. The brand is in serious need of a fresh take, but many shoppers might not be ready to shop at a store they view as outdated. Abercrombie has been universally downgraded by analysts and seems to be in a slump with no real sign of getting out any time soon.
Spring may enjoy a small boost during the Christmas season as people purchase new phones and plans, but the growth isn’t expected to last. 2017 is looking to be a rough year for the company, which hasin debt and is expected to be diluted soon. The sell off could start sooner rather than later, meaning prices could be dropping before Christmas presents have been opened.
Smart investing can lead to big holiday success and rewards that take you well into the new year. Do your research to take advantage of the great market surge that comes at the most festive time of year.