December is right around the corner. That means cold weather, holiday shopping, and celebrations. This year has certainly been one for the books in terms of the pandemic, the Presidential election, and of course, the stock market. With only one month left in this historic year, investors may be wondering what stocks to buy for next month. And I’ve got the answer.
What’s the first thing that comes to mind when I mention December? The holidays. And that means holiday shopping. This year’s shopping season is expected to be wildly different from years past due to the pandemic. That means e-commerce sites should see plenty of traffic and sales. But we can’t discount foot traffic just yet, especially when it comes to food. That’s why I suggest focusing on the largest retailer in the country, which also happens to have one of the best e-commerce sites in the business, Walmart (WMT).
Shopping isn’t the only part of the holiday season. There are also celebrations. While many officials are asking families to keep it small this year due to the virus, we are already seeing many ignoring officials and planning making travel arrangements for Thanksgiving, and I expect this to continue for Christmas. One type of food that people love, especially during this time of year, is chocolate. That’s why my second stock is The Hershey Company (HSY).
The final feature of December that many people think about is cold weather. That’s why my third pick is Canada Goose Holdings Inc. (GOOS).
Walmart Inc. (WMT)
WMT is my top retail stock right now due to its vast selection of products that can be ordered online and then can be shipped to your home, or you can come to pick it up at the store. You can also shop in-store for food for your celebrations, even though there might be foot traffic restrictions in the stores this year. The company is also known for its vast selection of low-priced products that should satisfy the needs of families that have been negatively impacted by the pandemic.
The company is benefiting from rising demand for grocery and general merchandise during the pandemic. The stay-at-home trend has boosted WMT’s e-commerce sales considerably. E-commerce sales soared 79% year over year in the U.S. segment for the third quarter. This follows an increase of 97% for the second quarter and 74% growth in the first quarter.
WMT’s U.S. comparable sales rose for the 25th straight time. Comparable store sales refer to a company’s revenue generated by a retail location compared to its revenue in a similar period in the past. WMT’s comparable sales were driven by strength in its core categories and a shift towards e-commerce. The company is also seeing growth in its international segment.
The stock is rated a “Strong Buy” in our POWR Ratings system. It holds “A” grades across the board in every POWR component, including Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank, plus its overall rating. WMT is also the #1 ranked stock in the Grocery/Big Box Retailers industry.
Hershey Co. (HSY)
I have yet to meet someone that doesn’t like chocolate, and with the holidays coming up, many consumers will be purchasing plenty of it. HSY was founded in 1894 and is the country’s most well-known chocolate company with classic brands, including the Hershey bar, Hershey Kisses, Reese’s, and my favorite, Kit Kat.
The company has already benefited from people staying home eating comfort food as it beat earnings and revenue estimates for its most recent quarter. Earnings were up 11.4% year over year, while revenue increased 4.2 %. This was driven by cost management, improved volumes, and strong pricing. HSY is also gaining from the ONE Brands’ buyout.
In addition to being the largest producer of quality chocolate products in the United States, it is also a global leader in sugar confectionery products. Chocolate and sugar products are primarily inexpensive, which makes them recession-resistant. Sales of their products should only continue as we head into December. The company also sports a 2.2% dividend yield.
HSY is rated a “Strong Buy” in our POWR Ratings system. It holds a grade of “A” in Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade and Industry Rank. The stock is also ranked #3 in the Food Makers industry.
Canada Goose Holdings Inc. (GOOS)
GOOS is a Canadian based company that designs, manufactures, distributes, and retails premium outerwear for men, women, and children. While the stock plummeted from January through mid-March, it is up a whopping 160.1% since March 16th. Not too bad for a retail company in a tech-driven market. In September, when tech stocks were faltering, GOOS continued its climb. While it did see a pullback in October, the stock has since resumed its rise in November.
The company primarily sees strong sales in the winter, and as we enter that part of the year, its stock should see further gains. In addition, the company’s products are considered luxury, and luxury products have not seen the drop in demand that we have seen in lower-priced discretionary goods. Plus, I suspect the pandemic won’t stop the wealthy from skiing this year.
For the environmentally conscious, the company recently announced it would debut its most sustainable parka, the Standard Expedition Parka, in January. The parka is made from recycled and undyed fabrics, responsibly-sourced down, and reclaimed fur. The company released its latest earnings results earlier this month and beat the consensus earnings estimate due to strong online sales and growth in China.
The stock is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” in Trade Grade and a “B” in Buy & Hold Grade, Peer Grade, and Industry Rank.
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WMT shares . Year-to-date, WMT has gained 29.02%, versus a 14.47% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...
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