The holidays are fast approaching. And despite signs that the economy is slowing, Americans are expected to spend more this year between Thanksgiving and New Year’s than they did in 2021.
According to accounting and professional services firm Deloitte, holiday retail sales are likely to boom. Expectations are that retail sales will total between $1.45 trillion and $1.47 trillion from late November to the start of January. That’s up about 5% from the same time last year. E-commerce sales during this year’s holiday sales period are expected to rise even more dramatically, with Deloitte forecasting year-over-year growth of 12.8% to 14.3%. Indeed, the firm says that e-commerce sales could exceed $260 billion, making for a very merry holiday sales season.
Clearly, Americans aren’t letting inflation and rising interest rates hold them back from celebrating year-end festivities. Other holiday sales forecasts are equally bullish. So, which companies and stocks are likely to benefit from all that holiday spending? Here is a list of seven stocks that could pop with the holidays.
|UPS||United Parcel Service||$164.01|
Many people depend on Walmart (NYSE:WMT) at Christmas time. From toys and decorations to food and stocking stuffers, Walmart has it all. Additionally, this company usually offers the best prices in town. That could be an especially attractive draw for consumers this year, with inflation in the U.S. continuing to run at a 40-year high, and costs up sharply for everything from turkeys to eggnog.
The world’s biggest retailer is following the lead of competitors this year and offering holiday sales earlier than ever before. The company started rolling out deals to consumers in October, rather than waiting until Thanksgiving at the end of November. Over the last month, Walmart has announced price cuts, expanded return options, and an enhanced omnichannel shopping experience. This is in a bid to kickstart its holiday shopping season into high gear.
In the coming weeks, Walmart said it will offer thousands more price “rollbacks” to help harried shoppers complete their holiday lists. Currently, WMT stock is only down 1% on the year at $141 per share. That said, a strong holiday boost could help turn the company’s share price green by New Year’s.
United Parcel Service (UPS)
Helping Santa get all those gifts and packages under the tree this year is the job of United Parcel Service (NYSE:UPS). The largest courier company in the world with annual revenues of more than $85 billion, UPS thrives during the holidays. In September, the company announced plans to hire more than 100,000 additional workers to help with the holiday shipping rush. These hires span the spectrum, from drivers to package handlers.
UPS said it anticipates package shipments to peak later in December this year and closer to Christmas, as consumers return to pre-Covid patterns and shop for items later and in-person. The company also expects to lose some business to Amazon (NASDAQ:AMZN), which is directly handling more of it its own shipments now. Still, the fourth and final quarter of the year is always the busiest for UPS.
UPS stock is down approximately 20% this year at $164 per share, mirroring the decline in the benchmark S&P 500 index.
Speaking of Amazon, the e-commerce giant made headlines around the world in October when it held a second Prime sales event for the year. Traditionally, Amazon’s Prime sales event has been held at Thanksgiving and tied into the Black Friday and Cyber Monday sales extravaganzas. However, Amazon decided to move up this year’s sales to October to try and kickstart holiday shopping early, and give its revenues a big boost in the fourth quarter.
While exact sales figures for the October event have yet to be made public by Amazon, preliminary indications are that the company sold more than 100 million items during the two-day event. Additionally, Amazon should continue to benefit from strong e-commerce sales throughout this year’s holidays, especially around Black Friday and during the lead-up to Christmas. Like the other companies on this list, the fourth quarter is typically the strongest for Amazon.
AMZN stock is down roughly 45% this year and trading at $90 per share. At this price, the stock is a true gift to investors.
CVS Health (CVS)
Pharmacy retailer CVS Health (NYSE:CVS) just reported its third consecutive earnings beat. The Woonsocket, Rhode Island-based company’s stock popped 3% after it reported Q3 earnings per share of $2.09 versus $1.99 that was expected on Wall Street. Revenue for the July through September period came in at $81.16 billion compared to $76.75 billion that was expected by analysts.
A big reason for the company’s continued strong earnings is revenue from CVS Health’s retail sales, which rose 7% year-over-year in the third-quarter. Those retail sales are likely to get a boost during the holidays as people turn to the company’s nearly 10,000 retail outlets for chocolates, stocking stuffers, and other items.
December is also cold and flu season, and that should help CVS Health’s pharmacy services, which saw revenue climb 10% higher from a year ago during the most recent quarter. CVS stock is down only 6% this year, outperforming all the major U.S. stock indices.
Southwest Airlines (LUV)
Let’s not forget holiday travel. After two years of sheltering-in-place at home, Americans are again planning to travel during the holidays this year. Approximately 70% of Americans saying they plan to travel to visit family and friends for Thanksgiving and/or Christmas. Thus, airlines are seeking to capitalize on the busy travel season, with most having already raised their fares by 50% or more from mid-November through early January.
One of the airlines most likely to benefit from the holiday travel boom is Southwest Airlines (NYSE:LUV). The world’s largest low-cost carrier and one of the busiest airlines in the U.S., Southwest carries more domestic passengers than any other airline in America. The company is rushing to resolve its staffing problems in the lead-up to Thanksgiving, announcing plans to hire more than 3,000 pilots this year and next.
LUV stock is down 16% this year and trading at $37 per share.
Best Buy (BBY)
As a purveyor of consumer electronics such as smartphones, video game consoles, and Ultra High Definition (UHD) television sets, Best Buy (NYSE:BBY) is typically ground zero for both Black Friday and Cyber Monday holiday sales. Consumers line-up around the country to crash the retailer’s Black Friday sales events at midnight the day after Thanksgiving, while millions more try to score deals online during Cyber Monday.
Like the other retailers on this list, Best Buy got a jump on the holidays this year, offering exclusive sales to customers in October. Not only has the company offered early Black Friday deals, it has also announced exclusive offers to its “My Best Buy” members, which, it says, will continue through January as part of what it is calling “Member Mondays.” This strategy could power Best Buy to a strong fourth quarter.
So far this year, BBY stock has fallen 34% to $67 a share.
Molson Coors (TAP)
We’ll end with a cup of holiday cheer. For that, investors should look to Chicago-based beverage giant and master brewer Molson Coors (NYSE:TAP). According to a survey published on the website Beveragedaily.com, Americans double their intake of alcohol between Thanksgiving and New Year’s, consuming eight alcoholic drinks a week compared to four during the rest of the year.
The most popular alcoholic beverages during the holidays are eggnog (40%), coffee with Bailey’s (34%), beer (28%) and cider (27%). Molson Coors, which is the second largest brewer in the U.S. and third largest maker of alcoholic beverages in the world, is sure to benefit from an uptick in sales during the holidays.
Strong year-end sales could further help TAP stock, which has benefitted from the economic reopening following the pandemic. Year-to-date, Molson Coors stock is up 5% at just under $50 per share, making it among the rare securities that are on the positive side of the ledger in 2022.
Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.