12 Best Seasonal Stocks To Buy Now

Published on December 25, 2022 at 10:18 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best seasonal stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Seasonal Stocks To Buy Now.

The global economy is expected to grow at a slow pace of approximately 1.6% in 2023 as financial conditions worsen, the winter antagonizes China’s COVID policy, and Europe’s natural gas problems persist. 2022 has been the worst year for the S&P 500 in more than ten years, as rising interest rates, some important corporate earnings misses, and growing concerns about global growth weighed heavily on the stock market. Seasonal investing means that an investment is profitable more than half of the time. Investors become increasingly confident in a seasonal investment as the frequency of profitable trades rises.

Seasonal stocks are defined by surging demand during different times of the year. For example, a company focused on designing and manufacturing snowsuits is probably not as active during the summer months, but may enjoy surges in the winter and holiday season. Similarly, air conditioning companies benefit primarily in the summer. Moreover, companies that experience peak demand during tourism months are also considered seasonal stocks, like hotels and resorts.

Some of the best seasonal stocks to invest in include The Home Depot, Inc. (NYSE:HD), MGM Resorts International (NYSE:MGM), and Hyatt Hotels Corporation (NYSE:H).

Our Methodology

We selected the following seasonal stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.

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Best Seasonal Stocks To Buy Now

12. Polaris Inc. (NYSE:PII)

Number of Hedge Fund Holders: 15

Polaris Inc. (NYSE:PII) is a Minnesota-based company that designs, engineers, manufactures, and markets power sports vehicles worldwide. It operates through three segments – Off-Road, On-Road, and Marine. The company offers off-road vehicles, including all-terrain vehicles, side-by-side vehicles, snowmobiles, and snow bikes. The demand for these vehicles typically surges in the winter.

On December 5, Jefferies analyst Anna Glaessgen raised the price target on Polaris Inc. (NYSE:PII) to $106 from $100 and maintained a Hold rating on the shares, citing recent momentum.

According to Insider Monkey’s data, 15 hedge funds were long Polaris Inc. (NYSE:PII) at the end of September 2022, compared to 13 funds in the prior quarter. The collective stakes in Q3 2022 increased to $149.3 million from $146.8 million in Q2. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 481,606 shares worth $46 million.

Like The Home Depot, Inc. (NYSE:HD), MGM Resorts International (NYSE:MGM), and Hyatt Hotels Corporation (NYSE:H), Polaris Inc. (NYSE:PII) is one of the top seasonal stocks to invest in.

Diamond Hill Capital made the following comment about Polaris Inc. (NYSE:PII) in its Q3 2022 investor letter:

“Other top contributors included Polaris Inc. (NYSE:PII), BOK Financial and Webster Financial. Polaris, a market leader in off-road vehicles, benefited from a restocking opportunity — inventory at dealers remains depleted, which can serve to offset near-term macroeconomic headwinds. The company also is perceived to be somewhat recession-resilient given its strong financial performance during and after the 2008 financial crisis. We took the opportunity to conclude our investment as we have increased concerns over rising competition, supply chain issues related to sourcing semiconductors and the business’s higher-than-perceived cyclicality.”

11. The Toro Company (NYSE:TTC)

Number of Hedge Fund Holders: 18

The Toro Company (NYSE:TTC) was founded in 1914 and is headquartered in Bloomington, Minnesota. The company focuses on designing, manufacturing, marketing, and commercializing professional and residential equipment worldwide. The company offers turf and landscape equipment products, snow and ice management equipment, and computer irrigation central control systems. The Toro Company (NYSE:TTC) is one of the best seasonal stocks to invest in.

On December 21, The Toro Company (NYSE:TTC) announced that it delivered record top and bottom-line results in FQ4 and for fiscal 2022, with full-year net sales exceeding $4 billion for the first time. Operating earnings as a percentage of net sales were 12.8%, compared to 7.7% in the same period last year.

Investment advisory Raymond James upgraded The Toro Company (NYSE:TTC) on December 22 to Outperform from Market Perform with a $130 price target. Analyst Sam Darkatsh issued the ratings update.

According to Insider Monkey’s data, 18 hedge funds were bullish on The Toro Company (NYSE:TTC) at the end of Q3 2022, compared to 23 funds in the last quarter. Select Equity Group is the largest stakeholder of the company, with approximately 6 million shares worth $513.8 million.

Wedgewood Partners made the following comment about The Toro Company (NYSE:TTC) in its Q3 2022 investor letter:

“The Toro Company (NYSE:TTC) contributed favorably to performance during the quarter. The Company benefited from pricing actions it took earlier in the year, offsetting rising input cost inflation. An important proof-point we consider when evaluating the competitive advantage of any business is whether margins can be maintained (or expanded), especially during periods of inflation. In addition, Toro continues to see robust demand for its professional and residential products. The Company has a backlog in its professional segment that is at its highest level since the year began, whereas residential products grew +7% on strong year and 2-year comparisons and despite many “home” categories across big-box retailers witnessing declines.

The Toro Corporation has an illustrious history stretching back to its founding in 1914. Many of us first encountered The Toro Company in the rite of passage when our parents finally relented in allowing us to cut the grass for the first time when we were barely taller than the lawn mower handle. From the Company’s humble beginning building tractor engines for the Bull Tractor Company in Bloomington, Milwaukee, the Company has methodically grown into the diversified conglomerate of today that possesses industry leading brand awareness, market share, technological prowess, and profitability.

We are always enamored with a company’s beginnings, so herewith is the short story of The Toro Corporation’s storied history. The “Toro” name was chosen given its first relationship with The Bull Tractor Company, which according to Company documents was the #1 brand of farm tractors in 1914. Shortly after, in 1919, the Company created the mechanized golf course equipment industry with their invention of The Toro Standard Golf Machine…” (Click here to read the full text)

10. Columbia Sportswear Company (NASDAQ:COLM)

Number of Hedge Fund Holders: 20

Columbia Sportswear Company (NASDAQ:COLM) was founded in 1938 and is headquartered in Portland, Oregon. The company designs, markets, and sells outdoor, active, and everyday lifestyle apparel, footwear, accessories, and equipment for skiing, snowboarding, hiking, climbing, mountaineering, camping, hunting, fishing, trail running, water sports, yoga, golf, and adventure travel. It is one of the premier seasonal stocks to consider. Columbia Sportswear Company (NASDAQ:COLM) paid a $0.30 per share quarterly dividend to shareholders on December 1.

On September 27, Cowen analyst John Kernan raised the price target on Columbia Sportswear Company (NASDAQ:COLM) to $86 from $85 and kept an Outperform rating on the shares. The analyst noted that management pointed to a significant opportunity, albeit non-linear, across categories and geographies as the Columbia and Sorel brands scale.

According to Insider Monkey’s third quarter database, 20 hedge funds were long Columbia Sportswear Company (NASDAQ:COLM), compared to 19 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest position holder in the company, with 474,925 shares worth nearly $32 million.

9. Hyatt Hotels Corporation (NYSE:H)

Number of Hedge Fund Holders: 30

Hyatt Hotels Corporation (NYSE:H) is an American hospitality company that operates through Owned and Leased Hotels, Americas Management and Franchising, ASPAC Management and Franchising, EAME/SW Asia Management and Franchising, and Apple Leisure Group segments. Hyatt Hotels Corporation (NYSE:H) is one of the premier seasonal stocks to invest in.

The company reported stronger than expected Q3 earnings and raised the outlook for the fourth quarter. For the full-year 2022, Hyatt Hotels Corporation (NYSE:H) now expects system-wide RevPAR of 60% to 65% and net room growth of approximately 6.5%. The company had forecasted 55% to 60% and nearly 6%, respectively, in August.

On December 15, Barclays analyst Brandt Montour raised the firm’s price target on Hyatt Hotels Corporation (NYSE:H) to $111 from $107 and kept an Overweight rating on the shares.

According to Insider Monkey’s data, 30 hedge funds were long Hyatt Hotels Corporation (NYSE:H) at the end of Q3 2022, compared to 26 funds in the last quarter. Mason Hawkins’ Southeastern Asset Management is the biggest position holder in the company, with 2.6 million shares worth $215.5 million.

Baron Funds made the following comment about Hyatt Hotels Corporation (NYSE:H) in its Q3 2022 investor letter:

“Shares of global hotelier Hyatt Hotels Corporation (NYSE:H) increased in the quarter on strong revenue-per-available-room results as business travel continued to recover from pandemic lows. While leisure rates dropped a little in the seasonally slower back-to-school period, this decline was expected and was more than offset by increases in business transient and group bookings. Robust rates across the industry are leading to higher margins, including for Hyatt. Hyatt is using the increased cash flow to buy-in its shares, indicating that it sees value in the stock.”

8. Mattel, Inc. (NASDAQ:MAT)

Number of Hedge Fund Holders: 33

Mattel, Inc. (NASDAQ:MAT) is a California-based children’s entertainment company that designs and manufactures toys and consumer products worldwide. The company operates through North America, International, and American Girl segments. Mattel, Inc. (NASDAQ:MAT) is one of the premier seasonal stocks to consider, given demand for children’s toys increases drastically in the Christmas and holiday season.

On October 26, DA Davidson analyst Linda Bolton Weiser maintained a Buy rating on Mattel, Inc. (NASDAQ:MAT) but lowered the firm’s price target on the shares to $31 from $45.

According to Insider Monkey’s third quarter database, 33 hedge funds were bullish on Mattel, Inc. (NASDAQ:MAT), and John W. Rogers’ Ariel Investments is the largest stakeholder of the company, with 15.7 million shares worth $298.5 million.

Here is what Longleaf Partners Small-Cap Fund Commentary has to say about Mattel, Inc. (NASDAQ:MAT) in its Q4 2021 investor letter:

“Mattel (24%, 1.40%; 16%, 0.96%), the global toy and media company, was a strong contributor in the fourth quarter and for the year. Despite store closures in Asia causing -20% regional revenues during the third quarter, Mattel’s consolidated sales still grew 8% due to its strong North American recovery. Barbie sales remain impressive as they have been for years, American Girl is finally returning to growth and Fisher Price is also recovering. The company is successfully passing through inflated costs with higher pricing and without losing volume. Despite the impressive results, the stock trades too low at less than 14x forward earnings, and that is before Mattel begins to monetize its massive non-earning asset Intellectual Property portfolio. Our appraisal of the value grew by more than 30% this year.”

7. Lennox International Inc. (NYSE:LII)

Number of Hedge Fund Holders: 35

Lennox International Inc. (NYSE:LII) is a Texas-based company that designs, manufactures, and markets products for the heating, ventilation, air conditioning, and refrigeration markets in the United States, Canada, and internationally. It operates through three segments – Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration. The demand for Lennox International Inc. (NYSE:LII)’s products increases in the summer and winter seasons.

On December 9, Lennox International Inc. (NYSE:LII) declared a $1.06 per share quarterly dividend, in line with previous. The dividend is distributable on January 13, 2023 to shareholders of record on December 30. Lennox International Inc. (NYSE:LII)’s dividend yield on December 23 came in at 1.74%.

Deutsche Bank analyst Nicole Deblase on December 15 raised the price target on Lennox International Inc. (NYSE:LII) to $300 from $284 and kept a Buy rating on the shares.

According to Insider Monkey’s third quarter database, 35 hedge funds were bullish on Lennox International Inc. (NYSE:LII), compared to 26 funds in the prior quarter. The collective stakes in Q3 2022 increased to $627.2 million from $489 million in Q2 2022. Ian Simm’s Impax Asset Management is the largest stakeholder of the company, with 607,860 shares worth $134.7 million.

6. DICK’S Sporting Goods, Inc. (NYSE:DKS)

Number of Hedge Fund Holders: 37

DICK’S Sporting Goods, Inc. (NYSE:DKS) is a Pennsylvania-based company that operates as a sporting goods retailer primarily in the eastern United States. The company provides sporting goods equipment, fitness equipment, golf equipment, and hunting and fishing products. Demand for DICK’S Sporting Goods, Inc. (NYSE:DKS) products surges typically in the summer, when hunting, fishing, and golfing season is at its peak.

On November 22, DICK’S Sporting Goods, Inc. (NYSE:DKS) declared a $0.4875 per share quarterly dividend, in line with previous. The dividend is payable on December 30, to shareholders of record on December 9.

Argus analyst Chris Graja on December 6 raised the price target on DICK’S Sporting Goods, Inc. (NYSE:DKS) to $140 from $130 and maintained a Buy rating on the shares. The analyst cited the company’s stronger than expected Q3 results as well as the management’s view that participation in outdoor activities has increased and that consumers have a higher preference for athletic apparel. The analyst also raised his FY24 EPS view on DICK’S Sporting Goods, Inc. (NYSE:DKS) by 25c to $12.25.

According to Insider Monkey’s data, 37 hedge funds were bullish on DICK’S Sporting Goods, Inc. (NYSE:DKS) at the end of Q3 2022, compared to 28 funds in the prior quarter. Stephen Mandel’s Lone Pine Capital is the largest stakeholder of the company, with 5 million shares worth $524.8 million.

In addition to The Home Depot, Inc. (NYSE:HD), MGM Resorts International (NYSE:MGM), and Hyatt Hotels Corporation (NYSE:H), DICK’S Sporting Goods, Inc. (NYSE:DKS) is one of the best seasonal stocks to watch.

Here is what Baron Fund has to say about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q1 2022 investor letter:

“Dick’s Sporting Goods, Inc. was the first stock Michael recommended to us shortly after he joined Baron Capital in 2003. Dick’s share price has since increased about nine-fold. Unfortunately, we sold our investment in Dick’s about six years ago and, although it was a successful investment, we did not realize the full benefit of Michael’s recommendation. We sold too soon because I was concerned that competition from internet retailers would have a permanent negative impact on Dick’s stores’ profitability. I was wrong. Dick’s stock price so far has about doubled after we sold…and its prospects have brightened!

We sold even though we considered Ed Stack, Dick’s Chairm”n and CEO, a terrific retailer, a great entrepreneur and a special person. Ed had built Dick’s from three bait and tackle stores his dad started into a uniquely positioned, nationwide chain of 730 sporting goods stores. In fact, Dick’s is now the largest nationwide sporting goods chain. Ed had purchased the three bait and tackle stores, the foundation of Dick’s business, from his dad. Ed’s mother loaned him the money to buy his dad’s stores! I’m not exactly sure what that signifies. But it may have something to do with Carl Icahn’s proclamation that “everything I have is for sale except my children…and maybe my wife.”

Ed and his newly appointed CEO Lauren Hobart visited us last month. Ed asked for the meeting to introduce us to Lauren, as well as to discuss the prospects for Dick’s new, large format stores with attached outdoor, student athletic fields. Lauren then described how well its new format stores were doing in two smaller communities. We also spoke about the successes of Dick’s omni-channel retailing efforts and how desirable Dick‘s stores have become to shopping centers trying to lure shoppers to return to their malls.”

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