There is a perception that Black Friday can provide insight into the retailer sales for the entire holiday season. Essentially, if sales are booming on that day, investors may take that as a sign to buy shares of successful retailers, believing that successful Black Friday sales can lead to a general rise in the stock market through the New Year.
So the question is, how much should you rely on stock price changes following Black Friday? Do those changes mean anything or are they just a hype?
A 2010 article written by Mark Hulbert at MarketWatch casts doubts on the assumption that a rise in stock prices following Black Friday has a positive effect on markets for the rest of the year. He offers his own findings which show that there is actually no correlation between stock prices after the Friday and Monday following Thanksgiving and stock prices at the end of the holiday season. (No word on how the January Effect may play into this trend)
On the contrary, Hulbert says that recent trends have shown a negative correlation. Perhaps because too many people fall into this hype and push stock prices up when the underlying value of the companies they represent cannot keep up with that rapid increase.
However, this year, there has been an interesting facet to Black Friday shopping that was not as important in 2010, when Hulbert did his research. And that facet is online shopping. Last year, about 40% of total spending on Black Friday was spent online. This year retailers are giving really awesome deals online and even the same deals as in-store to make sure they don’t lose out to competitors. The most likely effect of this is much higher sales this Black Friday. And a lot of investors will be very eager to grab a share of the huge profits these retailers are going to make. But one caveat, since Black Friday sales don’t always predict sales for the rest of the year, don’t be surprised if stock prices begin to fall again. Potential investors may want to invest now and sell them quickly as soon as prices begin to rise.
Another aspect of this year’s Black Friday shopping is the pure luxury that is being offered to many in-store shoppers. Some malls and retailers offer VIP parking and lounges for their customers and free refreshments. Apparently, one mall offered all those and more for a low fee of only $10 but they will not be doing that again this year – maybe because they made huge losses?
Black Friday kicks off the holiday shopping season, which can generate as much as 40% of a company’s total annual retail sales. We feel this important event deserves a closer look:
Looking to follow the Black Friday and Cyber Monday hype? As highlighted in the animated video above, these are some names to consider adding on your watchlist:
Popular Black Friday Plays:
Kohl’s is offering deals ahead of Black Friday. Stores open at midnight, and in addition to several door-buster and early-bird sales, customers can shop the online deals as early as Wednesday. They are also offering $15 Kohl’s cash for every $50 purchased on Black Friday.
2. Best Buy Co. Inc. (BBY, Earnings, Analysts, Financials): Operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. Market cap at $5.13B.
Hundreds of shoppers can be seen lined around Best Buy’s stores each Black Friday. Doors open at midnight.
Similar to Wal-Mart, Target has several door buster deals and plans to open stores on Thanksgiving day, at 9pm. It has received complaints that their determination to boost sales comes at the expense of their employees’ Thanksgiving evening. Target has responded by claiming their decision to open at 9pm reflects consumers’ preference to shop right after their dinner. They also claim employee preferences are taken into account when scheduling Thanksgiving shifts.
Saks Fifth Avenue represents some of the higher end retailers, including Nordstrom, Inc. (NYSE:JWN), Tiffany & Co.(NYSE:TIF). Like Macy’s these are common retailers in malls. But unlike Macy’s, these stores are offering consumers who might be scared away by rowdy crowds a more “white glove” experience.
Typically these high-end retailers do not offer promotions during the holidays. Although Saks made an exception last year offering discounts neat 70% off on popular brands, SmartMoney has predicted this year discounts will be “few and far between.” Saks has yet to announce their Black Friday hours.
Popular Black Friday AND Cyber Monday Plays:
Sears is offering two waves of doorbusters. The first at 8pm on Thanksgiving, and other at 4am on Black Friday. Sears members can also shop doorbusters online today through Monday.
Wal-Mart is discounting products a few hours earlier as they cut prices late on Thanksgiving day. Wal-Mart, Sears, Kmart and Toys R Us will all open stores at 8 p.m. Thanksgiving day.
Macy’s has always been a popular shopping destination, especially for the mall scene. The store is a natural beneficiary of the black Friday rush to other popular shops in malls and shopping strips. Macy’s is offering online Black Friday specials online Thursday November 22nd through Saturday November 24th. Stores will open at midnight through 1pm on Friday, November 23rd. Their website features several holiday deals, and a phone app so shoppers can receive in-store alerts on Black Friday specials.
Popular Cyber Monday Plays:
As items purchased online must be shipped, FedEx and UPS are without a doubt one of the biggest beneficiaries of Cyber Monday.
It’s been reported that “FedEx is forecasting a 13 percent increase in shipping this holiday season as compared with last; UPS predicts a 10 percent increase; and the U.S. Postal Service expects a whopping 20 percent jump in the number of packages shipped between Thanksgiving and Christmas.”
“FedEx predicts it will ship 280 packages, an increase from the 247 million packages last year.” FedEx says it will add 20,000 holiday workers to handle the 13% boost.
“UPS expects to move 527 million packages between Thanksgiving and Christmas this year, exceeding last year’s record of 480 million packages.”
10. eBay Inc. (EBAY, Earnings, Analysts, Financials): Provides online marketplaces for the sale of goods and services, as well as other online commerce, platforms, and online payment solutions to individuals and businesses in the United States and internationally. Market cap at $60.2B.
eBay’s PayPal will be in overdrive as consumers use the payment service for online shopping. eBay will also be offering “eBay Deals” on Black Friday and Cyber Monday. The particulars of the deals are “coming soon” according to its site. They will start November 19 at 8am PT.
Amazon and eBay are two of the biggest online retailers. Deals offered there will give investors an idea on trending consumer goods. According to their site, “We’ve been searching for the best Black Friday deals everywhere–including Black Friday deals other stores are planning–so we can bring them to you even earlier.”
12. HSN, Inc. (HSNI, Earnings, Analysts, Financials): Markets and sells a range of third party and private label merchandise primarily in the United States. It operates as an interactive multi-channel retailer, offering retail experiences through various platforms, including television, online, mobile, catalogs, and retail and outlet stores. Market cap at $2.69B.
HSN, owner of the Home Shopping Network, is already a popular retailer. It will begin offering Black Friday deals and coupons as early as November 21.
13. Overstock.com Inc. (OSTK, Earnings, Analysts, Financials): Operates as an online retailer offering discount brand, non-brand, and closeout merchandise in the United States. Market cap at $330.41M.
Competitor to eBay and Amazon, Overstock’s homepage features a countdown to Black Friday and advertises big discounts.
This article was originally written by Fay Faatin, and posted on Kapitall.