4 Christmas Stocks That Shine During the Holiday Season
Christmas is a time for good cheer, reflection and spending time with friends and family. Here are four stocks that reflect the season, ranging from Christmas tree providers to toymakers and beyond:
- Weyerhaeuser (NYSE: WY): Some little-known Christmas tree facts: there are 25 million to 30 million sold in the U.S. every year, with about 350 million currently growing in the country. It takes an average of seven years to grow a Christmas tree to its proper height.
Most Christmas tree farms are privately owned, but they need to get good seedlings from somewhere, so many turn to timber company Weyerhaeuser, which grows the most popular species—including balsam fir, Douglas fir, Scotch pine and white pine.
Weyerhaeuser controls about 6 million acres of timberland, with about a third of that in the Pacific Northwest, which is America’s most prolific lumber-producing region thanks to its cool, damp climate and considerable rainfall.
“The fact that it’s the largest timber producer in the Pacific Northwest makes Weyerhaeuser extremely attractive, because the company’s location gives it easy export access to China,” wrote Investing Daily analyst Benjamin Shepherd in a December 13 article. “This location also leaves it well-placed to pick up the supply slack created by lower production caps in Canada, which is typically a key Chinese supplier.”
- Mattel (NYSE: MAT) is proving that the most traditional toys you can think of—dolls—still have a place under the tree, even in the digital age. As we reported on October 16, Mattel’s doll lineup was the main reason why its third-quarter earnings surged past Wall Street estimates.
The company’s strength is centered on its ability to come up with popular new dolls while reimagining the tried-and-true. Right now, its Monster High franchise, which it rolled out in 2010, is stealing the show: the brand’s popularity propelled Mattel’s Other Girls’ Brands segment to a 28% sales jump in Q3. Sales of American Girl dolls have also been sparkling, with a 20% gain in the latest quarter.
By far the biggest name in dolls is Barbie, also a Mattel product. The doll was created by Ruth Handler—who helped found Mattel with her husband in 1945—and made its debut at the New York Toy Fair in 1959. Handler’s inspiration was a German Lilli doll she’d bought while visiting Switzerland in the mid-1950s. Mattel went public in 1960. In 1964, it acquired the rights to Lilli and promptly ended production.
Barbie’s sales have ebbed and flowed since then, but her star seems to be on the rise again after sales gained 3% in Q3, snapping four straight quarters of declines.
- Amazon.com (NasdaqGS: AMZN): The final numbers on the holiday shopping season aren’t expected to be spectacular, but online purchasing will likely again be a bright spot.
“Online is going to be the darling of the holiday shopping season,” Marshal Cohen, chief retail industry analyst at the NPD Group, said in a December 16 USAToday article. “It may grow a little more than the 20% that was expected before the season began. The consumer is spending more time online trying to find deals.”
Amazon.com is a major beneficiary of rising online shopping. CEO Jeff Bezos recently grabbed attention by rolling out the company’s plan to deliver goods using small airborne drones on the December 1 episode of 60 Minutes. The move—which put Amazon at the top of the news cycle on the eve of Cyber Monday—was a marketing masterstroke.
The company sells a bewildering array of products, from its Kindle Fire tablet to pet food and toilet paper. It has also branched out into myriad other areas, like providing cloud computing infrastructure.
The stock has surged 60% so far this year but its forward p/e ratio is now over 150, largely because Amazon continues to focus on building market share over bulking up its bottom line. That makes it a tricky proposition for investors and analysts alike.
Investing Daily’s Jim Fink once referred to Amazon.com as the “Teflon stock” due to its tendency to keep rising, even on bad news. “Some stocks are impossible to predict because investors are so enamored by the ‘story,’ Fink wrote in October 2012. “Silly things like a company’s profits have no bearing on the stock price. Amazon.com is one such stock.”
- Carmike Cinemas (NasdaqGS: CKEC): Hitting the theater is an important holiday tradition for many Americans. Hollywood always responds with a slew of big-ticket releases, and this year is no exception, with expected hits like The Hobbit: Desolation of Smaug and Anchorman 2 hitting screens in December.
It’s difficult to invest in directly invest in movie studios, because most are part of much larger firms, like Sony (NYSE: SNE) and the Walt Disney Company (NYSE: DIS). That leaves cinema operators as one of the few available avenues.
In a November 25 article, Investing Daily contributor Greg Pugh flagged Carmike, with a market cap of just $615 million, as a good way to profit from hit movies. The company owns 247 theaters with 2,521 screens in 36 states, including 229 locations (954 screens) that also support 3-D.
Carmike continues to focus on acquisitions, with plans to increase its size to 300 theaters containing 3,000 screens. At the same time, as Pugh points out, it’s working to provide the best possible experience in its current theaters. For example, it recently signed a deal with IMAX Corp. (NYSE: IMAX) to install 10 additional IMAX systems in both current Carmike locations and cinemas under construction. That will bring the total up to 18.
The average analyst estimate calls for Carmike to earn $0.66 a share for all of 2013, rising to $1.26 in 2014. Earnings could rise to $1.45 in 2015. Carmike trades at 22 times the 2014 figure. The stock has gained 88% year-to-date, including an 18% jump in the month since Pugh’s article was published.
From all of us at Investing Daily, have a Merry Christmas and a happy, healthy and restful holiday season.