Next month is Halloween. And with the COVID-19 pandemic almost over, most Americans are gearing up to celebrate this fun holiday. According to Numerator's 2022 holiday preview, 78% of Americans look forward to celebrating this year's Halloween, a significant increase from 2021 — 65% and 2020 — 58%. The implication is that the average expected Halloween spending might likely top 2021, which was a record $102.74 per person.
And as such, mass and specialty retailers are amping up to meet the demand surge of the season. For instance, Party City plans to hire roughly 20,000 seasonal team members to staff its 150 Halloween City pop-up stores and 750 Party City stores. This decision is a great move since pop-up retails make up about 35% of the annual Halloween market. Nevertheless, online retail is not left out, with about 45% of people planning to shop online, which means that e-commerce may represent a little under or over $3 billion compared to 2021.
Halloween's unwavering popularity and the overwhelming economic activities that go with it offer savvy investors an opportunity to benefit from seasonal stocks that characterize Halloween. Candies, chocolates, costumes, food and beverages, apparel, movies, home improvement items, and computer or video games are integral to Halloween consumer discretionary.
The stocks of companies that incorporate some of these items may perform better during Halloween and form the bulk of Halloween stocks. Benzinga evaluates some of the top Halloween stocks that are bound to yield investors returns during the Halloween season.
The Best Halloween Stocks
Halloween presents an opportunity for investors to earn returns by investing in Halloween stocks. Here is a look at some good Halloween stocks.
- Hershey Co. (NYSE: HSY)
- Mondelez International Inc. (NASDAQ: MDLZ)
- Tootsie Roll Industries Inc. (NYSE: TR)
- Target Corp. (NYSE: TGT)
- Walmart Inc. (NYSE: WMT)
- TJX Companies Inc. (NYSE: TJX)
Hershey Co. (NYSE: HSY)
Headquartered in Pennsylvania, Hershey is the leading confectionery manufacturer in the U.S. The company controls roughly 46% of the domestic chocolate space. Over the past century, the company's mix has grown to include over 100 brands in addition to its own label. These include well-known chocolate and candy brands such as Kit Kat, Kisses and Reese's Peanut Butter Cups. These products are sold globally in about 80 countries, including India, Brazil and Mexico. Nevertheless, the U.S. remains its largest market. The company's shares trade on the New York Stock Exchange (NYSE).
Hershey has a market capitalization of $45.9 billion and is among the world's five largest publicly traded confectioners. As of the time of writing, HSY trades at around $224.05 per share, with a price-to-earnings (P/E) ratio of 28.51, a price-to-book (P/B) ratio of 15.8 and a price-to-sales (P/S) ratio of 4.773. Furthermore, the stock has a dividend yield of 1.85% and has gained 15.81% this year, as reflected by the YTD. P/E, P/B and P/S are important valuation ratios useful in comparing stocks in the same sector. A P/E of 28.51 means investors are willing to pay a little over $28 for $1 current earnings of HSY stock.
GuruFocus rates HSY 9 out of 10 for both profitability and growth, indicating a high growth and profit potential long-term. Hershey's interest coverage for the quarter that ended in June 2022 was 13.51, an indicator of robust financial strength. Furthermore, the Piotroski F-Score of 7 indicates a healthy business condition. These, coupled with an Altman score of 5.53, imply the firm's stock is in a stable business condition with a strong financial standing. All these factors, combined with an expected increase in sales, position HSY for the potential for a solid up-price swing come Halloween.
Mondelez International Inc. (NASDAQ: MDLZ)
Producers of the famed Oreo cookies, Mondelez International Inc., is a Chicago-based global leader in the snacks arena. The company's product line includes biscuits (47%), chocolate (32%), gum or candy (10%), beverage (4%) and cheese and grocery (7%). Aside from Oreo cookies, Mondelez's other popular items include well-known brands such as Chips Ahoy, Milka, Halls, Trident and Cadbury.
Around one-third of the company's revenue comes from developing nations, approximately 40% from Europe and the rest from North America. The company's stock trades on the Nasdaq stock exchange as MDLZ. It has a market capitalization of $83.23 billion. It is among the top two largest publicly traded confectioner stocks in the U.S. MDLZ currently trades at $60.73 per share with a P/E ratio of 22.07, a P/B ratio of 3.023 and a P/S ratio of 2.844. These low ratios may indicate modest undervaluation. Nevertheless, MDLZ ratios have a constant positive trend, showing high-level stock potential. The company has already paid a dividend of 2.54% to investors this year.
GuruFocus rates MDLZ 8 and 7 out of 10 for profitability and growth, respectively, indicating a high profit and growth potential long-term. The company's international interest coverage for the quarter that ended in June 2022 was 10.48, meaning it is in good financial standing. Furthermore, its overall financial strength was rated 6 out of 10, which is better than competitors. The Altman Z-Score of 2.59 may indicate that the company is under financial stress. Nevertheless, possible record Halloween sales, expanding business vitality and excellent financial strength all point to a significant price reversal. This makes the stock a potential buy.
Tootsie Roll Industries Inc. (NYSE:TR)
Tootsie Roll Industries Inc. is a candy manufacturing and distribution company based in Chicago, United States. The company's popular product brands include Tootsie Rolls, Andes Chocolates, Charms, Dubble Bubble, Blow-Pops, Dots, Junior Mints, Sugar Daddy and Sugar Babies. The company directly offers its products to wholesale distributors and retail outlets. Geographically, the United States accounts for the majority of its revenue.
The company is one of only 20 companies that have grown dividends yearly for the past half-century, making it a potentially stable seasonal stock among its rivals. It trades on the NYSE with the symbol TR. Currently, the stock yield is just above 1%. However, the stock has returned a negative 0.70% YTD as of the time of writing.
Tootsie Roll company stocks have a market capitalization of $2.44 billion and trade at $35.31 per share with a P/E ratio of 35.17, a P/B ratio of 3.236 and a P/S ratio of 4.35. These high ratios mean the stock is overvalued, or investors think it'll perform excellently moving forward. Furthermore, GuruFocus' latest review rates Tootsie Roll's financial strength an 8 out of 10. This high grade reflects strong financial momentum, making it unlikely that the company would face financial difficulties.
A high Altman Z-Score index of 7.55 and Piotroski F-Score of 7 further reinforce the financial stability of the company's stocks. Plus, the company has a profitability ranking of 8. Considering candies are hot-ticket items for Halloween, you can imagine how excellent Tootsie stock will perform. The verdict implies a strong buy.
Target Corp. (NYSE: TGT)
Target is a leading American general merchandise retailer, with 1,926 stores (as of the end of fiscal 2021), offering a diverse range of products in several categories. These categories include apparel and accessories (17%), hardlines (18%), home furnishings and décor (19%), food and beverage (19%) and beauty and household essentials (26%).
The company has a significant e-commerce presence, responsible for approximately 19% of sales (up from about 9% in fiscal 2019). Furthermore, Target owns Shipt, an online same-day delivery company, a newer addition to its holdings. The company shares are traded publicly on the NYSE with the symbol TGT. TGT has a market cap of $75.75 billion, making it one of the most traded public stocks in the retail industry.
As of the time of writing, TGT trades at $164.60 per share with a P/E of 18.70, a P/B of 7.152 and a P/S of 0.7254. These ratios may indicate modest undervaluation, as confirmed by GuruFocus. The company offers a dividend yield of 2.62% and is rated 6 of 10 for financial strength by GuruFocus with robust interest coverage. High growth and profitability rank of 9 and 8 out of 10 reinforce TGT's underlying financial stability, long-term growth and profitability.
Although the net negative YTD yield and a moderate Altman Z-Score of 3.5 may send a different signal regarding the stock's price prospects in recent months. However, as the Halloween season approaches, additional income from increased shop activity may realign the stock's performance ratio in preparation for a future bull run. So it could be a great idea to put the company at the forefront of your Halloween stock options.
Walmart Inc. (NYSE: WMT)
At fiscal 2022 year end, Walmart was operational in over 10,500 locations under 46 banners. It is the largest U.S. retailer by sales, providing various general products and grocery items. Currently, its home market accounts for 82% of sales, with Mexico and Central America accounting for 6% and 4% for Canada. In the U.S., grocery accounts for around 56% of sales, followed by general goods at 32% then health and wellness at 11%.
Besides its proprietary site, Walmart also owns Flipkart, an e-commerce platform, and a 12.1% in JD.com — a Chinese online retail outlet owned by Tencent. E-commerce contributed 12% of fiscal 2022 sales.
With a market capitalization of $364.57 billion, WMT is probably the world's largest publicly traded retail company. The stock trades on the NYSE with the symbol WMT. The dividend yield is 1.68%. As of the time of writing, WMT trades at $133 per share with a net negative YTD of 8.08%. However, with a P/E of 26.54, a P/B of 4.699 and a P/S of 0.6271, the stock's potential remains at a record high. The retail company's revenue climbed 2.4% year on year to $141.6 billion, exceeding analysts' average revenue expectation of $138.9 billion.
GuruFocus rates Walmart's financial strength a solid 7 out of 10 on the back of a great interest coverage (12.91). Despite its continual struggle with rising operations cost and inflation, the company scored an impressive 4.41 on the Altman Z-Score index and 7 out of 9 Piotroski F-Score. With Halloween approaching, the combination of rising income, relative business stability and a seasonal sales surge could be ideal for triggering a bull run on the stock.
TJX Companies Inc. (NYSE: TJX)
TJX is a major off-price home fashion, apparel and other items retailer. The company sells a wide range of branded goods, leveraging its global network of 21,000 sellers to purchase inventories. The company aims to undercut typical retail pricing by 20% to 60% through its flexible merchandising network, relatively low-frills locations and a treasure-hunt shopping experience to drive profitability.
TJX generated 79% of its fiscal 2022 revenue in the United States, 11% in Europe (primarily the United Kingdom and Germany), 9% in Canada and the remaining in Australia. TJX trades on the NYSE and has a market capitalization of $73.75 billion. The stock currently trades at $63.52 per share with a P/E of 22.69, a P/B of 13.67 and a P/S of 1.533. These low ratios suggest modest undervaluation, as reinforced by GuruFocus and shown in the Peter Lynch chart.
Nevertheless, this stock has the potential to outperform the bulk of its rivals in terms of profitability potential, as shown by other metrics. These include the Altman Z-Score index score of 4.78, a Piotroski F-Score of 6 and a financial strength rank of 7 out of 10 on the back of excellent interest coverage of 56.24. All these are core indications of stock with robust financial strength that could deliver returns to investors.
TJX earned more than expected in the fiscal second quarter of 2022. But sales are falling short of estimates as the repercussions of historically high inflation continue to hit the consumer retail industry. TJX is expected to ultimately realize its predicted potential with the upcoming rise in retail sales around Halloween. The stock could be a good bet if you want to reap returns during the season's rush hour.
Stocks That Tend to Rise Around Halloween
Besides these Halloween stock picks, other companies exist whose stock performs very well during Halloween. These stocks may include textiles, entertainment, decorations, tech and more. They're not strictly Halloween stocks but may perform exceptionally.
Home Depot Inc. (NYSE: HD) is a multinational home improvement retail corporation whose services encompass home decoration. The company is already leveraging the rising popularity of Halloween decorations to reap returns. For instance, the company's giant $299 animatronic witch sold out online within a short time of starting its Halloween sales in August.
The company has a market capitalization of $298.83 billion. It is trading at $291.90 per share on NYSE at the time of writing. With a P/E and P/B of 17.93 and 1,263.64, GuruForce considers it modestly undervalued. It has an overall GuruForce score of 97/100 — nearly perfect. Additionally, this stock sits strong on the back of robust interest coverage (16.56) and a very high Altman Z-Score of 6.9. It has a perfect ranking (10/10) for profitability and growth. If you're an investor, you might want to check this one out.
Walt Disney Co. (NYSE: DIS) is another company stock that tends to rise during Halloween. Disney offers a collection of entertainment franchises plus a library of classic films and TV series that beats its competitors. Its signature streaming platform Disney+ was trendy during the pandemic, highlighting the company's innovative and long-term growth potential.
The Pixar catalog, Star Wars and the Marvel Cinematic Universe are some of the long lists of popular franchises from the House of the Mouse that established it as an entertainment giant. Besides entertainment and its famed theme park, Disney sells top-tier Halloween merchandise. The company is still recovering from the long-term impact of the pandemic plus its political altercation in Florida — home to its largest theme complex park. This is evident in its low Altman Z-Score (2.06), interest coverage (4.75) and negative YTD (28.21%).
Nevertheless, analysts expect earnings per share (EPS) to rise by 66% for the fiscal year 2022 ending in September and 39% for the fiscal year 2023, according to S&P Global Market Intelligence. A profitability rank of 8 and a relatively high Piotroski F-Score of 6 indicate high potential for profitability and moderate financial strength. Considering this stock might be a good idea since the Halloween surge can make a lot of difference. That said, it might also be a risky bet.
Stitch Fix Inc. (NASDAQ: SFIX) offers customers personal styling services by leveraging artificial intelligence (AI) and machine learning (ML) software. It is an ideal company for the Halloween sales surge. Let's face it, being able to create your personalized apparel, shoes and accessories online and have them shipped to you seems like a pretty cool thing to do. However, since 2021, the company has suffered many operational challenges that have torpedoed its earnings and returns. This is reflected in its low Altman Z-Score (3.02), Piotroski F-Score of 4 and negative YTD of 73.94%.
Gap (NYSE: GPS) is another similar stock that ordinarily should surge during Halloween but is also marred by operational problems. DraftKings Inc. (NASDAQ: DKNG) was a popular Halloween gaming stock back in 2021. Although it may still surge this Halloween, it doesn't look good right now.
Halloween Companies to Watch
Besides Halloween stocks and other publicly traded companies whose stocks perform well during Halloween, various non-publicly traded companies also make waves during Halloween. Spirit Halloween is one of those companies. Founded in 1983, Spirit Halloween has become the favorite destination for all things Halloween by Americans.
Spirit Halloween boasts 1,400 locations across North America, mainly in strip malls and traditional malls. Drive past any suburban strip during the Halloween season, and you'll see a bright orange spirit banner swinging in front of one Spirit's seasonal pop-up store. Because of its penchant for occupying older storefronts, especially those previously owned by famous brands like Toys “R” Us, it became an inspiration for numerous memes.
While Spirits doesn't publicize sales, its parent company Spencer Gift LLC — the mall retailer renowned for gag gifts, sex toys, room decor, brand merchandise, and other novelties — hauls in an estimated $400 million annually. Spirit is not showing any signs of slowing, so if anything Spirit will most likely out-sell itself next month. In preparation for that, Spirit is debuting its movie — Horror Film — on Oct. 11, 2022. It is also the subject of this movie.
Besides Spirit Halloween, another company you might like to monitor closely in case it goes public is Halloween Express. While Spirit Halloween touts itself as the #1 global Halloween store, Halloween Express, its closest competitor, touts itself as the global custodian of the largest selection of Halloween merchandise. Its offerings range from scary or sexy to straight-up hilarious. There are also custom party merchandise, couples and kid costumes, and many other items.
The company claims to have licensed customs from various top movies and TV shows, plus more than 9,000 accessories. So definitely, they're worth keeping watch over. Other top Halloween-themed companies that you may like to also keep watch over in case they go public in the future include Yandy LLC, Costume SuperCenter LLC, Rubies II LLC, and many more.
Why Invest in Seasonal Stocks?
Typically, price movement in the stock market involves unpredictability; no one can predict a stock's price motion with certainty. You can only make predictions using price performance, price history and other relevant instruments and hope it's credible.
On the other hand, seasonal stocks allow you to optimize returns because market conditions tend to follow the same historical trends. Furthermore, you will be trading within a short time frame and, as such, will remain unexposed to the majority of the stock market's volatility. It's a simple strategy — get in, make your money quick and pull out before the dip. Investing in seasonal or holiday stocks can allow you to hedge your bets and potentially take advantage of the quick growth associated with those seasons or holidays.
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Frequently Asked Questions
How does Halloween affect the stock market?
Like other festivities, Halloween has a seasonal stock impact. It causes an increased demand for a particular group of commodities often consumed during the season. The rising demand can trigger an upswing in the stocks of the company producing the item.
Which companies profit the most from Halloween?
Halloween consumer discretionary items include candies, chocolates, costumes, food and beverages, fashion, movies, home renovation items and computer games tend to profit most from Halloween purchasing. Stocks of companies that contain some of these goods are more likely to do well during Halloween.