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No Trick, 4 Halloween ETF & Stock Treats for Investors (Revised)

Are you apprehensive that a bubble formed by an overvalued stock market can burst anytime? Or are you scared of rising rate concerns with both the Fed and ECB giving hawkish signals?

Well, fear before Halloween is understandable. But unlike the real event, its effect on the market is not at all scary. In fact, instead of tricking investors, the Halloween Effect is usually a treat.

Halloween Effect is a historically observed increase in stock prices from the month of November through the end of April. It is exactly opposite the popular adage "sell in May and then walk away” which refers to the six months between May 1 and Oct 31.

Among overall buoyancy, retail sales deserve a special mention this time around. Vacations, holiday season buying (both Christmas and spring season) and seasonal optimism may play a huge role in this surge.

The National Retail Federation expects retail sales to grow between 3.6% and 4%, totaling $678.75 billion to $682 billion in the November-December period. Also, the International Council of Shopping Centers sees a 3.8% uptick in retail sales. Deloitte sees this figure going higher to 4% to 4.5% (without considering cars and gasoline). Forrester Research estimates that online sales will jump 12% this holiday season, to $129 billion (read: 3 ETFs to Tap Upbeat Electronics Sales Forecast).

In fact, the likely rosy trend starts with Halloween itself as the event greets the fall season. And “conventional wisdom is that strong Halloween spending is an indicator of strong Christmas season spending” as per an analyst. So, let’s take a look at the Halloween sales projection.

Spending to Touch All-Time High This Halloween

Halloween spending jumped three times in the last 12 Years. National Retail Federation estimated that Americans will likely spend a staggering $9.1 billion this Halloween, up about 8% year over year. Consumers are expected to expend $86.13 on average, up from last year’s $82.93. Sentiments are pretty upbeat with 12.9% thinking about economic conditions before spending, down from 14.1% in 2016.

Costumes will account for the largest share of spending, in billions, though just 69% of consumers will likely go for them. On the other hand, 95% will likely shell out around $2.7 billion on candies. As much as 72% of consumers will spend about $2.7 billion on decorations and 37% will pay nearly $410 million for greeting cards.

In fact, a new idea has emerged lately. People are celebrating with Halloween trees like they do in Christmas. Sales of Halloween trees at the -commerce home goods company Wayfair, leapt about 20% year over year. This upbeat numbers came despite Toys R Us’ bankruptcy and store closures by Sears and Macy’s (read: Profit from Retailers' Defaults With These ETFs).

Needless to say, retail sales will be on a roll in the upcoming days and put the following ETFs and stocks in focus.

ETF Picks

Global X Social Media ETF SOCL

About 64.6% of population under the survey search for shopping ideas from social media, including Facebook, Pinterest, YouTube and Twitteralong with traditional ways.Two years ago, only 44% used to follow these online tools. Plus, 35% of consumers will purchase costume online.  So, online ETF SOCL is highly in focus now (read: Twitter Surges on Q3 Results: Log in to These ETFs).

Amplify Online Retail ETF IBUY

The afore-mentioned arguments make it necessary to look at the $107-million fund that has 39 stocks in its portfolio. After all, 22% shopping will likely be done online.

First Trust Nasdaq Retail ETF FTXD

As much as 47.1% Halloween shopping will be done at discount stores. So, discount retailer stock-heavy funds are in the spotlight now. Kohls Corp KSS and Wal-Mart WMT have considerable weight in the fund (read: Netflix at Record High: ETFs to Play).

VanEck Vectors Retail ETF RTH

Several discount retailers like Costco COST, Ross ROST, Dollar General DG and WMT have solid exposure to this fund.

Stock Picks

Ross Stores Inc. ROST

Ross Stores runs a chain of off-price retail apparel and home accessories stores. The stock has a Zacks Rank #2 (Buy) with a VGM Score of B, at the time of writing. Its Zacks Industry Rank is in the top 28%.

Tucows Inc. TCX

The company provides personalized information agents and websites. TCX has a Zacks Rank #3 (Hold) with a VGM Score of C. Its Zacks Sector Rank is in the top 25%.

Mondelez International Inc. MDLZ

This food and beverage company is famous for its Cadbury chocolates. It has a Zacks Rank #3, a VGM Score of C and belongs to a Zacks Industry Rank in the top 36%.

Party City Holdco Inc. PRTY

The company is into manufacturing and selling of party goods, including paper and plastic tableware, balloons, Halloween and other costumes and stationery. Though the stock has a Zacks Rank #3, it has a VGM score of A.

(We are reissuing this article to correct a mistake. The original article, issued on Oct 30, 2017, which incorrectly mentioned the AUM and the number of total stocks for IBUY, should no longer be relied upon.)

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Tucows Inc. (TCX): Free Stock Analysis Report
 
VANECK-RETAIL (RTH): ETF Research Reports
 
GLBL-X SOCL MDA (SOCL): ETF Research Reports
 
FT-NDQ RETAIL (FTXD): ETF Research Reports
 
AMPL-ONLN RETL (IBUY): ETF Research Reports
 
Mondelez International, Inc. (MDLZ): Free Stock Analysis Report
 
Party City Holdco Inc. (PRTY): Free Stock Analysis Report
 
Wal-Mart Stores, Inc. (WMT): Free Stock Analysis Report
 
Dollar General Corporation (DG): Free Stock Analysis Report
 
Costco Wholesale Corporation (COST): Free Stock Analysis Report
 
Ross Stores, Inc. (ROST): Free Stock Analysis Report
 
Kohl's Corporation (KSS): Free Stock Analysis Report
 
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