Back to top

Halloween Spending Projected to Touch $9B in 2018: 5 Picks

Read MoreHide Full Article

Americans are evidently gearing up to make 2018’s Halloween more special than the ones witnessed over the past few years. This year’s Halloween spending is now projected to touch as much as $9 billion, according to the National Retail Federation (NRF). This would be the second-biggest spend since the Great Recession.

After the NRF expected holiday retail sales to increase significantly this year after last year’s record gains, strong projections for this Halloween season also added to the positive sentiment. In this context, choosing stocks from this space seems to be a wise investment choice ahead of Halloween.

Halloween Spending: Fewer Spooks, More Fun

The NRF currently expects Americans to spend $9 billion or $86.79 per person on Halloween this year, higher than the year-ago level of $86.13 a person. Shoppers are expected to spend about $3.2 billion on costumes, $2.6 billion on candy, $2.7 billion on decorations and $400 million on greeting cards.

Per the NRF survey, shoppers are targeting discount, specialty and department stores for their Halloween purchases. Of the total Halloween purchases, 44.6% is done in discount stores, 34.9% in specialty stores and 24.7% in department stores. In fact this time, men are participating more in spending, according to NRF.

NRF President and CEO Matthew Shay said: “The economy is good and consumer confidence is high, so families are ready to spend on Halloween this year.” Shay added that this Halloween season retailers are piling up new supplies for children and adults “with their favorite decorations, candy and costumes.”

Holiday Season to Boost Retail Sales

Retail sales during the last two months of 2017 climbed 5.5% to reach $691.9 billion, per the NRF. Unlike last year, when retail sales witnessed its best growth since the Great Recession, holiday sales are projected to advance between 4.3% and 4.8% in 2018, settling at about $720.9 billion.

Although this year’s retail growth forecast is not as high as the 2017 performance, an increase between 4.3% and 4.8% is considerably higher than the five-year average of 3.9%. Holiday sales are important for retailers with some even making around 40% of its annual sales in the November-December period. NRF President Matthew Shay said that “healthy economy and strong consumer confidence” will facilitate growth even this year like 2017.

On the earnings front, in the Zacks Retail And Wholesale sector, eight companies have already reported in the third-quarter reporting cycle. Of these eight, five posted an earnings beat, while two met their consensus estimate.

5 Stocks to Buy

As mentioned earlier, retailers are clearly the primary gainers from this impressive Halloween and upcoming holiday sales outlook. Hence, investing in specific stocks from this domain looks to be profitable right now.

Here, we have selected five stocks that are that are expected to gain significantly from robust Halloween sales. However, picking winning stocks may prove difficult.

This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows one to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score. Moreover, these stocks also carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation (TGT - Free Report) is a general merchandise retailer in the United States. For Halloween 2018, discount stores have started a “Happy Halloween” segment and are offering Halloween costumes and accessories at a considerable discount.

The company is based in Minneapolis, MN, and has a Zacks Rank #2 and VGM Score of A. It has expected earnings growth of 14.28% for the current year. The Zacks Consensus Estimate for the current year has improved 1.9% over the last 60 days.

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is an owner and operator of entertainment and dining venues for adults and families. Dave & Buster's will host the “House of the Dead: Scarlet Dawn” arcade game in all of its locations in the United States this month.

The company is based in Dallas, TX, and has a Zacks Rank #2 and VGM Score of A. It has expected earnings growth of 5.64% for the current year. The Zacks Consensus Estimate for the current year has improved 0.7% over the last 60 days.

The Children's Place, Inc. (PLCE - Free Report) is a children's specialty apparel retailer and sells apparel, accessories, footwear, and other items for children. The company’s “Halloween Shop” section is offering more than 30 different items at discounted prices.

The company is based in Secaucus, NJ, and has a Zacks Rank #2 and VGM Score of A. It has expected earnings growth of 3.29% for the current year. The Zacks Consensus Estimate for the current year has improved 1.9% over the last 60 days.

Burlington Stores, Inc. (BURL - Free Report) is a retailer of branded apparel products in the United States and offers fashion-focused merchandise. For Halloween costumes, the company offers more than 50 different products with discounts of up to 50%.

The company is based in Burlington, NJ, and has a Zacks Rank #2 and VGM Score of B. It has expected earnings growth of 42.31% for the current year. The Zacks Consensus Estimate for the current year has improved 3.8% over the last 60 days.

Ross Stores, Inc. (ROST - Free Report) is an operator of off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brands in the United States. Moreover, Ross’s “#yesforless” movement is grabbing eyeballs this Halloween month.

The company is based in Dublin, CA, and has a Zacks Rank #2 and VGM Score of B. It has expected earnings growth of 23.28% for the current year. The Zacks Consensus Estimate for the current year has improved 1.7% over the last 60 days.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>



Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

More from Zacks Analyst Blog

You May Like