Investors could be getting an extra sweet Valentine's Day gift this year: A gift basket of stocks primed to prosper, thanks to the projected $18.6 billion in sales the holiday is expected to generate. That would represent a 5.8% jump over last year.
The boost in Valentine's Day sales is part of the larger positive economic trend developing in the first quarter of 2011. IBISWorld retail industry analyst Nikoleta Panteva says a number of retail companies are likely to benefit from the recent surge in consumer spending.
"People are just ready to spend because consumer confidence is up," Panteva says, noting that luxury spending is also up and is becoming a strong fuel for retail sales.
For Valentine's Day, IBISWorld projects sales of flowers to increase by 16.8%, jewelry by 11.3%, candy by 5.1%, greeting cards by 4.9%, restaurants by 3.8% and clothing, including lingerie, by 3.4%.
Among the companies that are poised to benefit most are:
American Greetings (AM): In 2010, itseasonal cards category grew by 5%, despite an overall revenue decline. This year, IBISWorld expects volume sales of its value cards segment to improve revenues as more school-age children exchange holiday cards. The stock, which closed at $21.90 per share Friday, climbed 4.27% in 2010.
Hershey (HSY): Hershey's well-known brand name and widespread product availability, along with its affordable prices, make the company a surefire winner this Valentine's Day. Sales of its Kisses and Hugs holiday-themed products will sweeten any portfolio. Shares in the king of U.S. confectioners closed at $47.04 on Friday and grew a healthy 35.32% in 2010.
Signet Group (SIG): Signet, which owns Kay Jewelers and Jared, has lowered its prices even more to attract budget-conscious consumers. The jeweler saw holiday sales grow by 8.1% in 2010, and IBISWorld expects its strategy to produce even better performance in 2011. The stock, which closed at $41.56 on Friday, enjoyed a 62.43% gain in 2010.
Tiffany (TIF): Tiffany is the diamond among the publicly traded jewelry companies, and it's coming off of a great 2010 holiday season where it racked up substantial gains. With luxury spending showing signs of significant growth, IBISWorld expects the iconic brand to continue its recent success. The stock closed at $57.54 on Friday, and enjoyed growth of 47.02% in 2010.
1-800-FLOWERS (FLWS): An expanded product line, including gift baskets of candy, fruit and wine, and its leadership in e-commerce have IBISWorld betting on a turnaround for 1-800-FLOWERS in 2011. Last-minute online purchases are likely to fuel revenues this year, especially since Valentine's Day is on a Monday. The company's stock closed at $2.85 on Friday, after a disappointing 2010 when its price only grew by 1.51%.
Limited Brands (LTD): Coming off of a 14% increase in its third quarter sales, IBISWorld expects Victoria's Secret, Limited's lingerie chain, to post exceptionally strong fourth quarter numbers as well. Led by Victoria's Secret's semi-annual sale which is timed to target Valentine's Day shoppers, the projected boost in holiday volume should lift Limited Brand's stock price. Shares of Limited Brands, which closed at $28.92 on Friday, sauntered to an 83.63% gain in 2010.
Darden Restaurants (DRI): Darden Restaurants, which owns Red Lobster, Olive Garden, LongHorn Steakhouse, Capital Grille and Bahama Breeze, is expected to experience a "sizable bump" this Valentine's Day. Its well-known chains have strong reputations that should benefit from romantic dinner dates tied to the holiday. Darden stock, which served up a 35.67% gain in 2010, closed at $45.18 on Friday.
Brinker International (EAT): Anchored by its Maggiano's Little Italy and Romano's Macaroni Grill chains, Brinker, too, is expected to benefit from dining connected with Valentine's Day. These two restaurant options serve up Italian cuisine "from well-known brand names that are nice and cater to middle-income Americans," says Panteva. Brinker International shares, which closed at $23.50 on Friday, gained 43.5% in 2010.
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