While it might immediately seem the most intuitive concept, investors may want to start planning stocks to buy this winter. Cooler weather and the eventfulness that it brings implies more folks stuck indoors. And that might have a negative impact on emotional wellbeing, which could dissuade investor sentiment.
On the other hand, some experts believe that enough reasonable evidence exists that cooler temperatures offer better market returns than compared to the summer season. Then again, other experts also state that the jury is still out regarding the viability of winter stocks to buy. So, who should investors believe?
If forced to render an answer, my response would be to focus on core fundamentals rather than the season. For instance, we know that the winter climate brings with it certain activities that you don’t find in the summer and vice versa.
That’s a better approach to stocks to buy this winter rather than tuning into your local weather report for market guidance and analysis.
Home Depot (HD)
It’s not that much of a stretch to call Home Depot (NYSE:HD). Also, you can add controversial to that description. Recently, company co-founder Bernie Marcus made his choice for president clear, angering those who felt otherwise. Subsequently, social media has been abuzz about boycotting the home improvement retailer. Put another way, Home Depot is hot this winter but perhaps not in a good way.
Then again, this controversy may be much ado about absolutely nothing. Let’s be real – we’re not a dictatorship so people are free to vote for whomever they want. On a more important note, HD makes an enticing case for stocks to buy this winter. I’m thinking about the inclement weather conditions that will materialize during this season. And that means more demand for home improvement products.
To be fair, I wouldn’t call HD a good deal on paper given its ho-hum 20x earnings multiple. Nevertheless, you’re getting predictability for a very modest premium. Its three-year revenue growth rate clocks in at 15.2% while the company commands an excellent net margin of 10.22%.
Target (TGT)
If you want to dial up the risk-reward factor for your winter stocks to buy, Target (NYSE:TGT) might be appealing. Naturally, the cold season brings us the holidays, which should enliven shoppers’ mood. As well, the cash registers should be ringing if the latest data is to be believed. According to The Wall Street Journal, Black Friday spending was strong this year.
Even better, Fortune reported that Cyber Monday was tracking for over $12 billion in sales. Now, I’m too cheap to fork over the money to climb the paywall. However, the headline clearly stated that it represented the biggest online shopping day of all time. That’s quite an endorsement and it bodes very well for Target.
To be sure, the company has its fair share of challenges. True, it more than delivered the goods regarding its third-quarter earnings. Unfortunately, theft has also increased, which has been a major thorn on its side. Indeed, I urged investors to avoid it earlier this year and I’m glad I did. However, an argument can be made that it’s de-risked. Thus, it could be one of the stocks to buy this winter.
VF Corp (VFC)
A global apparel and footwear company, VF Corp (NYSE:VFC) on paper represents the riskiest idea on this list. Since the beginning of this year, VFC lost more than 38% of equity value. That’s an awful performance, needless to say. On top of that, despite the Black Friday and Cyber Monday sales bump, questions remain about the viability of the consumer economy.
Can customers afford the shop-until-you-drop narrative? Consistently fading consumer sentiment suggests otherwise. Nevertheless, for extreme contrarian speculators, VFC might make a case for stocks to buy this winter. As the owner of several outdoor brands like JanSport, Timberland and especially The North Face, winter is when VF should come alive.
Of course, “alive” and “38% loss” represent two concepts that don’t mix well together. I get that. At the same time, you could make the de-risking argument here. In the trailing month, VFC returned over 16% to shareholders. On the financial side, the stock trades for 8.74x trailing-year earnings without non-recurring items (NRI). That’s practically subterranean, which might pique speculators’ interest. However, it’s a consensus hold so just watch out for that.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
