The holiday season is here, and you know what that means: ’tis the season to spend! Most obviously, it’s the season to spend on gifts for your family and friends, but also on investments that will pay you dividends in the new year. According to historical data, December and January are among the best months for stocks. And for consumer-facing B2C stocks, the “January effect” can be even bigger, as blowout earnings from the holiday season send them higher than average.
There are a number of Canadian stocks that are perfectly positioned to profit from the winter consumer spending spree. The first I’ll mention is one that has already made significant sums of “holiday” money from this year’s Black Friday.
Shopify (TSX: SHOP)(NYSE:SHOP)
Shopify is by far Canada’s biggest e-commerce company and one of the biggest TSX tech stocks, period. It runs the infrastructure for more than 600,000 stores, including many that sell highly giftable physical products.
On Black Friday weekend, this company made headlines by doing $1.5 billion in sales and processing over 5,200 transactions per minute. Shopify is well known for live-blogging its sales data during high-volume events, so it’s very likely that we’ll get an indication of how the company is doing long before next year’s first earnings report. And, regardless, this company is a growth champion that grew revenue at 58% in its most recent quarter, which is already a strong reason to buy.
Canada Goose Holdings (TSX: GOOS)(NYSE: GOOS)
Canada Goose is yet another company that’s perfectly positioned to profit off holiday shopping. The company makes the world’s most popular high-end winter parkas, which carry a steep price tag and feature an unmistakable design. In its most recent quarter, Canada Goose grew earnings at 33% year over year and had a stunning 45% return on equity. Beyond that, it sells winter clothing, which makes it exactly the type of company that will sell tonnes of product over the holidays. Expect blowout results when this company releases earnings in March.
Lululemon Athletica (NASDAQ: LULU)
Last but not least, we have Lululemon. Lululemon is growing earnings even faster than Canada Goose, with a stunning 96% year-over-year growth rate. The company is also rapidly increasing its same-store sales, which indicates that demand for its products is growing. Speaking of which, Lululemon’s main product category, high-end athletic clothing, makes for an extremely popular gift. So, don’t be surprised if Lululemon makes record sales this Holiday season — and rewards investors when earnings come out afterward.
Bottom line
When investing in December, it’s wise to pick stocks that will profit from holiday spending. Often, these are consumer-facing companies whose products are popular as gifts. All three of the stocks mentioned in this article are growing by leaps and bounds, even without the catalyst of holiday spending. The addition of that catalyst makes the argument for buying them even stronger.
