Snuggle Up to These 5 Valentine's Day Stocks
As a guy, I was born with a natural dislike for Valentine's Day. Whether that feeling is from osmosis or the depleting effect this national holiday has on my wallet, I'm not quite sure. What I do know is that while it might be a detriment to most men's wallets, it means money in the bank for some of America's top companies.
According to Reuters, about $18 billion will be spent on Valentine's Day in 2012. Although one day doesn't equate to a year's worth of sales, Valentine's Day represents an important chunk of sales for these five companies. My advice: snuggle up and get comfortable with these stocks because they're entering what should be a very good week.
1-800-Flowers.com (NAS: FLWS)
Let's go ahead and put this one under the "Duh!" file. Valentine's Day is the busiest day of the year for florists, and according to the Society of American Florists, in 2007 roughly 214 million roses were produced for those special occasions. 1-800-Flowers isn't going to give you stellar growth rates or provide the same innovation you'd often look for in a growing business, but it does provide fairly consistent cash flow. At 13 times forward earnings, this could be a stock that won't wither away if you forget to water it for a week.
Build-A-Bear Workshop (NYS: BBW)
Since private-equity firm Mustang Group purchased Vermont Teddy Bear back in 2005, I have been searching for an investing alternative to those cuddly bears -- and I just may have found it in Build-A-Bear. Unfortunately, there's no stuffed animal sales index to track, but a recent study by Compete of nearly 1,000 people found that women are more likely to buy a stuffed animal than men. Costing less than most traditional gifts, Build-A-Bear should be able to capitalize on the momentum it built in the third quarter when it crushed Wall Street's estimates.
American Greetings (NYS: AM)
Perhaps no gift is more of a sure thing than receiving a greeting card on Valentine's Day. Within the same study by Compete, 54% of all recipients indicated they would be purchasing a greeting card in addition to their gift. Not surprisingly, women are 23% more likely to purchase a greeting card than men.
American Greetings loves all holidays, but Valentine's Day can be extremely lucrative for the company. According to the Greeting Card Association (yes, that really exists), an estimated 160 million greeting cards will be sold for Valentine's Day this year. Following an earnings warning from American Greetings last quarter, Valentine's Day could be the pick-me-up this company needs at just seven times fiscal 2013's earnings.
Hershey (NYS: HSY)
Nothing says "I love you" more than an attempt to fatten up your partner with a delicious box of chocolates. Back in 2009, a Nielsen survey indicated that during the week leading up to Valentine's Day, consumers will buy 58 million pounds of chocolate for an estimated $345 million. This represents 5% of all chocolate purchased during the course of a year.
All of this sounds like great news for confectioner Hershey, which also recently boosted its quarterly dividend by 10%. With Hershey's new yield now a sweet 2.5% and its projected five-year growth rate a healthy 8%, it could be the time to sink your teeth into this delectable stock.
Tiffany (NYS: TIF)
Last, but not least, we have the Valentine's Day jewelry bump. Like roses, the choice to give jewelry as a gift is skewed toward men by a 3.5-1 ratio. This is the primary reason that men, on average, spend $50 more than women do on Valentine's Day gifts. This bodes well for a company like Tiffany, whose same-store sales have recently hit a snag. Projected to grow at 15% over the next five years, Tiffany has a brand name that simply won't tarnish despite a picky consumer.
There you have it -- five stocks that could return some of the money you're presumably about to spend on Valentine's Day. Do you have a favorite? Or perhaps there's one I failed to mention? Share it in the comments section below and consider adding these names to your free and personalized watchlist.
Also, don't let your search for great companies stop here. Our own chief investment officer recently identified a company he's dubbed the "Costco of Latin America." To find out what has him so excited, grab your copy of "The Motley Fool's Top Stock for 2012." It's completely free to you for a limited time.
- Add 1-800-Flowers.com to my watchlist.
- Add Build-A-Bear Workshop to my watchlist.
- Add American Greetings to my watchlist.
- Add Hershey to my watchlist.
- Add Tiffany to my watchlist.
At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He'd gladly pay you Tuesday for a hamburger today. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that thinks it's better to give than receive.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.