Black Friday Stocks

Black Friday Stocks to Watch

8 min read

Thanksgiving and Black Friday mark the start of the holiday shopping season. It provides a unique lens through which investors can gauge consumer sentiment, economic outlook, and the performance of retail giants. As a result, let’s talk Black Friday stocks.

If sales expectations are met, it can be a good indicator for retail giants and companies in other sectors. The 5-day period between Thanksgiving and Cyber Monday is critical. However, many other economic and political factors can affect the stock market.

Are these holidays an opportunity for investors to feast in the stock market? Let’s find out more about Thanksgiving and Black Friday.

Black Friday Stocks

Thanksgiving is a time to relax with family and friends. For this reason, on Thanksgiving Thursday, the stock market is closed and is only open until 1 pm during Black Friday. However, after the long weekend on Cyber Monday, everything goes back to normal. What does that mean for Black Friday stocks?

Fun fact: It’s called Black Friday because, in the old days, profits were recorded with black ink while losses were in red ink. 

How Do Thanksgiving and Black Friday Affect the Stock Market?

Spoiler alert: Black Friday doesn’t wield substantial influence over the stock market. While certain sectors experience short-term fluctuations, the broader market remains largely unscathed. What does that mean for markets day stocks?

Historically, the stock market’s performance from the week before the holiday to the week after has been mixed. Since 2001, positive returns following the long weekend happened only 50% of the time. S&P returns exceeding 1% happened thrice (2001, 2007, and 2012). 

Retail Sector

According to a National Retail Federation (NRF) study, the average American shopper will spend over $300 between Thanksgiving and Cyber Monday. This is a very busy period for shoppers and retail companies. How does this affect Black Friday stocks? 

In the last 15 years, the retail sector has outperformed the S&P from the week before to the week after the holidays. Since 2007, the S&P’s average return was 3%, while the S&P 500 Retail ETF (NYSEARCA: XRT) returned an average of 5.06%.

The consumer discretionary index also performed well during this period, with a solid average return of 4.54%. What does this mean for the broader markets?

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Black Friday Effects on the Stock Market

As we can see, Black Friday has a short-term effect on many stocks but also has some consequences on the broader market. What do these Black Friday stocks do?

  • Consumer Sentiment: Consumer sentiment closely ties to black Friday and the holiday shopping season. Positive consumer sentiment can have broader economic implications, potentially leading to optimism in the stock market. Stocks can perform strongly and lead to a Santa Claus rally in December.
  • Long-term Implications: While Black Friday is a short-term event, it can offer insights into consumer spending trends, which can have longer-term implications for the retail and consumer sectors. Investors and analysts often examine Black Friday sales data and consumer behavior to make predictions about these sectors’ performance in the coming months.

How to Invest in Black Friday Stocks

Some stocks will perform well during the 5-day holiday but will keep the momentum going in the long term. Here are a few examples of Black Friday stocks that have historically performed well during and after Thanksgiving, Black Friday, and Cyber Monday.

1. Retailers

Retail companies offer Black Friday and Cyber Monday deals both in-store and online. Consumers will jump on the occasion to purchase their loved ones’ gifts for the holidays even after those sales as Christmas approaches very quickly. Let’s look at a couple of Black Friday stocks to watch.

Walmart (NYSE: WMT) is one of the largest retailers in the world and offers amazing deals for shoppers. The company’s stock has been positive every December between 2010 and 2022, except in 2018 and 2022. Some gains were modest, but others were over 5% (2011 and 2021). 

Home Depot’s (NYSE: HD) stock has had an impressive run since 2020. Consumers buy home improvement and construction products to decorate, renovate, and prepare for their guests. It’s also a good time to stock up on general maintenance products. Home Depot’s stock has been in the green every December since 2010, except in 2022. The stock saw gains between 2 to 6%.

2. E-commerce

E-commerce stocks have also enjoyed a nice ride in December, making them more than just Black Friday stocks. They act as intermediates between the buyers and the sellers. More transactions lead to more revenues during that period.

Since 2010, both Amazon (NASDAQ: AMZN) and eBay (NASDAQ: EBAY) have been in the red only in 2018, 2021, and 2022. They were part of the bigger tech selloff from the last few years.

However, since 2010, Amazon saw significant gains in December, ranging from 1 to 10% increases with an average gain of just below 6%. On the other hand, eBay’s were much more modest but still ranged between 1 and 4% (almost 10% in 2011).

3. Consumer Electronics

Consumer electronics have always been a favorite among consumers for Black Friday stocks and beyond. Everyone wants a new gadget, and the list gets bigger every year. Trends led to the rise of GoPro (NASDAQ: GPRO), which has been in the green every December since its IPO in 2014 except in 2022. The stock is down 92% since its IPO, but December sales led to an average increase of around 10%.

Another great example is Apple (NASDAQ: AAPL), which usually releases its new iPhone in September. The company’s stock has a very successful holiday period, and its sales in December usually rise around 7-8%. Apple only recorded an unsuccessful month of December in 2018, 2021, and 2022, identical to Amazon and other big tech giants.

4. Payment Processors

Visa (NYSE: V), Mastercard (NYSE: MA), and American Express (NYSE: AXP) handle over 95% of all transactions in the US every year. During the holiday period, the number of transactions they handle increases even more. All three companies have grown tremendously over the last decades; December is no exception. 

Since 2010, 2022 was the only year they were all in the red. Their gains weren’t consistent throughout the years, but December has been very kind to Visa, Mastercard, and American Express shareholders. 

5. Logisics & Shipping

For those buying all their purchases online, who has to deliver them to your doorstep? Logistics and shipping companies. They are extremely busy during the holidays, and their services are well-appreciated. Some of the most popular are UPS (NYSE: UPS) and FedEx (NYSE: FDX).

Once again, both companies share very similar results in December since 2010. Both performed very poorly in 2018 and 2022. FedEx’s stock decreased by over 22% in December 2018. However, the remainder of December has been very lucrative, with around 4 to 6% returns. In December 2020, FedEx even gained over 21%.

You can see the repetitive patterns. These stocks performed poorly in 2018, 2021, and 2022 due to global political and economic fears.

Final Thoughts: Black Friday Stocks

The 5-day weekend starting on Thanksgiving and ending on Black Monday can lead investors to serious gains in December. In the examples above, most stocks benefitting during that period failed to do so in 2018, 2021 (COVID), and 2022 (inflation rise).

When holiday sales expectations are met, and economic and political conditions forces in the world aren’t in shambles, you can expect certain stock sectors to perform very well. 

If you want to learn more about profiting from the stock market, head to our free library of educational courses. We have something for everyone, including trading options for those with small accounts

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