Some companies are seasonal, meaning they do better during different times of the year. For example, some companies do better during the summer (Cold Stone, theme parks, Vegas hotels) and some do better in the winter (Starbucks, Macys, Amazon, JetBlue). Companies that do better in the winter for the most part break even during the year and then finally get into the black (turn a profit) in November and December as purchasing increases. These companies can be compared to what is called a cyclical stocks meaning that they do better in a booming economy. Companies like this do better when the winter economy is booming because demand increases for their products.
As the cooler months start rolling in it is wise to shift your portfolio toward companies that will be booming during the holiday season. Our investment club has pulled a few.:
Amazon: Amazon is already a great company, period. They do well the entire year. However, with more and more people shopping online and with faster shipping with Amazon prime, Amazon is set to take even more market share from their competitors.
Visa: Unfortunately, with high prices and low wages our country has become a debtor nation. People buy goods on credit cards, racking up debt and interest and this all gets paid to Visa, MC and AMEX (all great companies to buy during this time of year.) While this debt crisis will ultimately be addressed via policies and politics, it is wise to capitalize on what we know is a lucrative opportunity. In the mean time, if it doesn’t get addressed, at least we are making money on the people making money off this debt crisis.
Netflix: Netflix and chill, I have nothing more to say. But seriously, winter months keep people inside and people inside binge on movies and tv. Furthermore, cable isn’t getting any cheaper so people are migrating away from cable and more and more people are cutting the cord. Cord cutting + superb original Netflix content = no more cable and much more Netflix subscriptions aka profit for investors.
Southwest and other airlines: Airlines do a ton of business during the holiday season as people travel to visit their loved ones. Additionally, with oil prices low, profit margins are much greater. This allows for greater EPS numbers coupled with higher stock prices and dividends for investors.
Starbucks: I love buying Starbucks (SBUX) into the winter because I love buying Starbucks during the winter. Sometimes a good investment idea is that simple. If you love it and others love it, the market will likely love it too. I used that same conviction in my Netflix purchase and it popped about 20% post Q3 earnings. Investing isn’t hard when you invest in what you know and what you love. Keep that in mind when you look at any stock.
When purchasing stocks into the holiday season keep in mind that most of the time these numbers come to fruition in the January/February Q4 earnings reports. So plan to buy and hold these at least and until that period has passed. These are just a few ideas but get in the habit of keying in on common sense trends that you see and can capitalize on. If you see high traffic and long lines at the stores that usually means high profits and potential gains for your portfolio.
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