With the start of Thanksgiving week, investors are bullish on U.S. stocks, given the history of strong market performance. Although Americans are expected to spend less this year with holiday meals becoming expensive, U.S. stocks should get a boost from improving consumer confidence and upbeat traveling.
These five stocks — Papa John's International ( PZZA Quick Quote PZZA - Free Report) , Vipshop Holdings Ltd ( VIPS Quick Quote VIPS - Free Report) , Copa Holdings ( CPA Quick Quote CPA - Free Report) , Echo Global Logistics and Ambev ( ABEV Quick Quote ABEV - Free Report) — could reap solid gains this Thanksgiving week and could be compelling picks for investors. Solid Historical Trends
History shows that the holiday-shortened week is a feast for stock investors –– even those with low volumes. According to Bespoke Investment Group, the Thanksgiving week has returned modest gains for stocks since 1945. The researchers say that since then, the entire week of Thanksgiving has averaged a
60-basis-point advance for the S&P 500, with the best returns coming on the Wednesday before the holiday and Black Friday, and the only decline on average on Monday at the start of the week. Sam Stovall, the chief investment strategist at CFRA, also said the last five trading days of November have been traditionally positive since 1950. There is a two-third likelihood that the market will be up the day before Thanksgiving, a 57% likelihood for an increase the day after Thanksgiving, and a 71% likelihood that it will be up on the following Monday. Current Trends
Consumer confidence is stronger than expected, hiring has been picking up and wages are rising. While inflation is rising at the fastest pace in 30 years, retail sales remain robust. U.S. retail sales in October surged for the third consecutive month and jumped the maximum since March. Americans started to shop early to avoid the shortage of goods due to the ongoing pandemic. A wider reach of vaccinations has also accelerated economic reopening and encouraged traveling. However, rising inflation fears as well as the prospect of rate hikes continue to keep stock returns in check.
As food prices have risen, a report from LendingTree showed that Americans would spend $391.60, down 18% from 2020. About 47% of Americans plan to host Thanksgiving dinner this year — the highest percentage in three years. Inflation and supply chain interruptions have made holiday meals expensive this year, according to the American Farm Bureau Federation. The average cost of serving 10 people for Thanksgiving is expected to be $53.31 (or more than $5.00 per person), up 14% from the last year and marking the priciest meal in the survey's 36 years. Bright Spots
According to travel service provider American Automobile Association (AAA), Thanksgiving holiday travel is expected to rebound nearly to the pre-pandemic levels. More than 53.4 million Americans will travel this Thanksgiving weekend (Nov 24-Nov 28), up 13% from the last year and the highest single-year increase since 2005. Of them, 48.3 million (up 8% from the last year) will go on road trips, 4.2 million (up 80%) will fly, and the remaining 1 million (up 262%) will travel by train, bus or cruise. With the lifting of pandemic restrictions and increasing consumer confidence, travelers remain upbeat while making their travel plans this holiday season.
Notably, a report from the U.S. airlines group, Airlines for America (A4A), shows that 28.5 million passengers will travel during the 12-day Thanksgiving air-travel period, up 3% from 2016. The 2.38 million passengers per day expected to take to the skies represent an increase of 69,000 from the 2016 Thanksgiving travel period. Airlines are accommodating this increase in demand by adding 86,000 more seats in the marketplace each day, up 3.2% from 2016. According to the Transportation Security Administration, about 2 million people a day are projected to fly from Nov 19 through Nov 28 and there are chances that the numbers for some days would exceed that average dramatically. Passenger traffic for the last five days of the period is expected to be just 9% below 2019. Stocks to Shower Gains
Investors could take advantage of this week’s historically bullish feast with the stocks in the above-mentioned industries. These stocks have a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold), a Growth Score of B or better, and have witnessed positive earnings estimate revision for the holiday quarter over the past month. You can see
. the complete list of today’s Zacks #1 Rank stocks here Papa John's International Papa John's operates and franchises pizza delivery and carryout restaurants in the United States and other specific international markets. The company’s dine-in and delivery restaurants operate under the brand name Papa John’s. Papa John's International has a market cap of $4.8 billion. Papa John's saw solid earnings estimates revision of 10 cents over the past month for the holiday quarter. Papa John's carries a Zacks Rank #2 and a Growth Score of A. Vipshop Holdings Vipshop Holdings is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website. Vipshop Holdings offers a wide selection of various famous branded discount products including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products, through its website. Vipshop Holdings has witnessed positive earnings estimate revision of a couple of cents for the current quarter in a month. With a market cap of $6.9 billion, VIPS has a Zacks Rank #3 and a Growth Score of A. Copa Holdings Copa Holdings, through its main subsidiaries — Copa Airlines and Copa Colombia — offers airline passenger and cargo services. Copa Airlines currently operates approximately 104 scheduled flights, which fly to 54 destinations, covering 25 countries in North, Central, South America and the Caribbean from its Panama City hub. Copa Holdings saw a solid earnings estimate revision of 23 cents over the past 30 days for the holiday quarter. CPA has a Zacks Rank #2 and a Growth Score of A. Echo Global Logistics Echo Global is a leading provider of technology enabled transportation and supply chain management services, delivered on a proprietary technology platform, serving the transportation and logistics needs of its clients. Echo Global’s web-based technology platform compiles and analyzes data from its network of over 22,000 transportation providers to serve its clients' shipping and freight management needs. Echo Global saw positive earnings estimates revision of a penny over the past month for the holiday quarter. Echo Global carries a Zacks Rank #2 and has a Growth Score of B. Ambev Ambev is engaged in producing, distributing and selling beer, carbonated soft drinks and other non-alcoholic and non-carbonated products in many countries across the Americas. Ambev maintains an agreement with PepsiCo International, Inc. to bottle, sell and distribute Pepsi products in Brazil and other Latin American countries, including Lipton Ice Tea, Gatorade, H2OH!, Propel and Frutzzz. Ambev has seen positive earnings estimate revision of a penny over the past 30 days for the holiday quarter. The stock has a Zacks Rank #3 and a Growth Score of B.