15 Best Seasonal Stocks to Buy Now

Published on September 27, 2021 at 9:34 am by Vardah Gill in Hedge Funds, News

In this article, we discuss the 15 best seasonal stocks to buy now. You can skip our detailed analysis of the seasonal stocks and go directly to read the 5 Best Seasonal Stocks to Buy Now.

Shrewd investors always take into account the short-term seasonal effects while creating their investment strategies. As the economy slowly begins to come back to normal and consumers prepare for the holiday season, analysts believe now is the right time to pile into seasonal stocks for both short- and long-term gains.

Effect of Seasons on the Market

According to a paper published by American Economic Association, the stock market tends to perform better in the initial months of the year, because these months foretell the performance for the rest of the year. This paper elaborates that the ‘Halloween Indicator’, a market-timing strategy, is held true in 36 of 37 developed financial markets globally.

Summer and Economic Recovery

On the other hand, according to a paper published on investors’ sentiments by the Journal of Financial and Quantitative Analysis, investors remain bullish in spring, as compared to the autumn. According to the analysts, investors should ignore the infamous Wall Street axiom, ‘sell in May and go away’ and strategize their investments according to each year’s pattern. The stock market has seen the tendency of summer rallies in the past. According to a report published by Wall Street Journal, since 1957, the average return of S&P 500 during the summer months stands at 1.3%. The index has delivered a positive average return for 66% of the time in months from May to October, since its inception in 1928. This can also be attributed to the fact that summer vacation-dependent stocks tend to perform better during these months. For example, online travel companies like Booking Holdings Inc. (NASDAQ:BKNG) and Expedia Group, Inc. (NASDAQ:EXPE) are seeing growth in bookings as travel and tourism are resuming. For example, in April, the occupancy rates reached 85% of their 2019 levels, CNBC reported.

Holiday Season

If we put this in perspective, certain stocks tend to perform better during the holiday season, such as Christmas, Black Friday, Thanksgiving, etc. In 2020, holiday retail sales grew 8.3% from 2019, fueled by online shopping and providing contactless options to consumers due to the Covid pandemic. Some of the stocks that benefit the most during the holiday season include Mattel, Inc. (NASDAQ:MAT), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), The Home Depot, Inc. (NYSE:HD), and Royal Caribbean Group (NYSE:RCL).

Our Methodology:

In this context, let’s analyze the list of the 15 best seasonal stocks to buy now. The stocks mentioned below in the list are the companies that tend to perform better at a certain time in a year. In addition to this, we took into account hedge fund sentiments, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.

Why pay attention to hedge fund sentiment while choosing stocks?

Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

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Best Seasonal Stocks to Buy Now

15. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS)

Number of Hedge Fund Holders: 24

1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) ranks fifteenth on our list of the best seasonal stocks to buy now. It is an American floral and foods gift retailer and distribution company. In February 2021, the company reported nearly 60% growth in its e-commerce sales due to Valentine’s Day.

In August, Craig-Hallum lifted its price target on 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) to $50, while keeping a ‘Buy’ rating on the shares. The firm’s analyst showed confidence in the company’s e-commerce segment, which is well-positioned for continued sales growth and profits. In the fiscal fourth quarter of 2021, 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) posted a GAAP EPS of $0.20, beating the estimates by $0.02. The company’s revenue of $487 million presented a 16.5% growth from the prior-year quarter. For FY22, 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) expects revenue growth of 10% to 12%. The stock gained 21.1% in 2021 and 39.6% in the past year.

As of Q2 2021, 24 hedge funds tracked by Insider Monkey have positions in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), up from 22 in the previous quarter. The total value of these stakes is over $93 million. With shares worth $18.2 million, Mario Gabelli’s GAMCO Investors is the company’s leading shareholder.

14. Mattel, Inc. (NASDAQ:MAT)

Number of Hedge Fund Holders: 25

Mattel, Inc. (NASDAQ:MAT) is an American toy manufacturing company and owner of one of the most famous catalogues of children’s entertainment franchises globally. The company’s strong sales are underpinned by the holiday season as the toy demand surges during that time. Mattel, Inc. (NASDAQ:MAT) stands 14th on our list of the best seasonal stocks to buy now.

In July, JPMorgan lifted its price target on Mattel, Inc. (NASDAQ:MAT) to $28, while keeping an ‘Overweight’ rating on the shares. The firm’s analyst Tami Zakaria appreciated the company’s market share growth for the consecutive third quarter and believes that the trend will continue due to the rising toy demand. In Q2 2021, Mattel, Inc. (NASDAQ:MAT) posted an EPS of $0.03, beating the estimates by $0.09. The company’s revenue for the quarter stood at $1.03 billion, up 40.7% from the prior-year quarter.

As of Q2 2021, 25 hedge funds tracked by Insider Monkey have stakes in Mattel, Inc. (NASDAQ:MAT), same as in Q1. The total value of these stakes is $928.9 million.

Like Booking Holdings Inc. (NASDAQ:BKNG), Expedia Group, Inc. (NASDAQ:EXPE), The Home Depot, Inc. (NYSE:HD), Starbucks Corporation (NASDAQ:SBUX), MGM Resorts International (NYSE:MGM), The Gap, Inc. (NYSE:GPS), and Nutrien Ltd. (NYSE:NTR), Mattel, Inc. (NASDAQ:MAT) is one of the stocks favored by investors and analysts in 2021.

Longleaf Partners Fund mentioned Mattel, Inc. (NASDAQ:MAT) in its first-quarter 2021 investor letter. Here is what the firm has to say:

“Mattel (14%, 0.87%), the global toy company, also contributed to the Fund’s positive returns. Fourth quarter sales grew 10%, with Barbie once again leading with an impressive 18% growth, American Girl up 9% due to direct-to-consumer strength, Hot Wheels up 12% and Infant/Toddler growing 7%. Margins also improved to increase EBITDA 53% year-over-year (YoY) during the company’s all-important seasonal peak. CEO Ynon Kreiz’s outlook for 2021-23 includes achievable targets of mid-single-digit revenue growth and continuously improving margins. Mattel’s strategically important IP monetization has also developed well with no fewer than 25 media projects in the works. We expect significant contributions from these high-margin IP revenues over the next several years and do not think the market yet gives the company credit for the scale of this opportunity.”

13. Lennox International Inc. (NYSE:LII)

Number of Hedge Fund Holders: 26

Lennox International Inc. (NYSE:LII) is an American provider of climate control solutions for heating, air conditioning, ventilation, and refrigeration markets. The company ranks 13th on our list of the best seasonal stocks to buy now.

In Q2 2021, Lennox International Inc. (NYSE:LII) posted an EPS of $4.57, beating the consensus by $0.16. The company generated $1.23 billion in revenue, presenting a 30.7% year-over-year growth and surpassing the estimates by $40 million. Lennox International Inc. (NYSE:LII) lifted its FY21 guidance and now expects 11%-15% revenue growth. In July, Barclays lifted its price target on Lennox International Inc. (NYSE:LII) to $350 from $340, while keeping an ‘Equal Weight’ rating on the shares. The stock gained 14.5% in the past year and 14.02% year to date.

As of Q2 2021, 26 hedge funds tracked by Insider Monkey have positions in Lennox International Inc. (NYSE:LII), up from 25 in the previous quarter. These stakes are valued at $465.7 million. Impax Asset Management is the company’s largest shareholder, with shares worth $155.5 million.

12. Nutrien Ltd. (NYSE:NTR)

Number of Hedge Fund Holders: 28

Nutrien Ltd. (NYSE:NTR) stands 12th on our list of the best seasonal stocks to buy now. It is a Canadian fertilizer company, which is also the largest producer of potash and the third-largest producer of nitrogen fertilizer in the world. The company’s products are mostly used during the monsoon season to increase the soil yield.

In August, HSBC analyst Santhosh Seshadri noted that Nutrien Ltd. (NYSE:NTR) can benefit from the recent strength in fertilizer market fundamentals which can generate free cash flow for the company. The firm lifted its price target on Nutrien Ltd. (NYSE:NTR) to $73, while keeping a ‘Buy’ rating on the shares. In Q2 2021, the company posted revenue of $9.76 billion, up 15.9% from the prior-year quarter. Nutrien Ltd. (NYSE:NTR) has also raised its FY21 guidance and now expects adjusted EPS in the range of $4.60 to $5.10, versus the estimates of $3.99 per share.

As of Q2 2021, 28 hedge funds tracked by Insider Monkey have positions in Nutrien Ltd. (NYSE:NTR), worth over $596.8 million. The number of hedge funds having stakes in the company stood at 33 in the previous quarter. With over 17.3 million shares, worth $1.04 billion, First Eagle Investment Management is the company’s largest shareholder.

Like Booking Holdings Inc. (NASDAQ:BKNG), Expedia Group, Inc. (NASDAQ:EXPE), The Home Depot, Inc. (NYSE:HD), Starbucks Corporation (NASDAQ:SBUX), MGM Resorts International (NYSE:MGM), and The Gap, Inc. (NYSE:GPS), Nutrien Ltd. (NYSE:NTR) remained on investors’ radar in 2021.

Millar/Howard Investments mentioned Nutrien Ltd. (NYSE:NTR) in its first-quarter 2021 investor letter. Here is what the firm has to say:

“For the most part, performance of the stocks within the Income-Equity Strategies was skewed towards the high-performing market sectors with two exceptions – our consumer discretionary and technology stocks both did better than their broad market peers… We bought Nutrien (NTR), a producer of fertilizer, which we believe should benefit from increasing crop prices.”

11. Columbia Sportswear Company (NASDAQ:COLM)

Number of Hedge Fund Holders: 29

Columbia Sportswear Company (NASDAQ:COLM) is an American company that deals in outerwear, sportswear, and footwear. Along with this, the company also manufactures and sells holiday-centric products, such as headgear, ski apparel, camping equipment, and outwear accessories. Columbia Sportswear Company (NASDAQ:COLM) ranks 11th on our list of the best seasonal stock to buy now.

Recently, Columbia Sportswear Company (NASDAQ:COLM) signed an agreement with the USA Curling to promote its product lines to athletes and coaches for various competitions including the 2022 Olympic. In Q2 2021, Columbia Sportswear Company (NASDAQ:COLM) posted revenue of $566.3 million, beating the estimates by $63.3 million and showcasing a 78.9% year-over-year growth. This June, Baird lifted its price target on Columbia Sportswear Company (NASDAQ:COLM) to $130, while keeping an ‘Outperform’ rating on the shares. The firm’s analyst sees an opportunity in the company’s substantial sales and earnings beat. The stock gained 16.7% in 2021 and 12.9% in the past year.

The number of hedge funds having stakes in Columbia Sportswear Company (NASDAQ:COLM) increased to 29 in Q2 2021, from 21 in the previous quarter. The total value of these stakes is $243.9 million. Arrowstreet Capital is the company’s leading shareholder with shares worth $83.8 million.

10. The Toro Company (NYSE:TTC)

Number of Hedge Fund Holders: 32

The Toro Company (NYSE:TTC) specializes in designing, manufacturing, and marketing of turf maintenance equipment and services, such as snow removal equipment and irrigation system supplies. The company’s products are used during the winter season, especially in the mountainous regions. The Toro Company (NYSE:TTC) stands 10th on our list of the best seasonal stocks to buy now.

In Q3 2021, The Toro Company (NYSE:TTC) posted an EPS of $0.92, beating the estimates by $0.13. The company’s revenue for the quarter stood at $976.8 million, presenting a 16.1% year-over-year growth. For FY21, The Toro Company (NYSE:TTC) expects a 17% growth in sales, up from its previous guidance of 12% to 15%. In August, Baird rated the stock as ‘Neutral’ with a $116 price target. Since the beginning of the year, The Toro Company (NYSE:TTC) delivered a 10.11% return to shareholders, while its 12-month returns came in at 25.9%.

As of Q2 2021, 32 hedge funds tracked by Insider Monkey have positions in The Toro Company (NYSE:TTC), worth $976.2 million. The number of hedge funds having stakes in the company remained the same in the previous quarter. Select Equity Group is the company’s leading shareholder with over 4.7 million shares, worth $522.1 billion.

9. Leslie’s, Inc. (NASDAQ:LESL)

Number of Hedge Fund Holders: 35

Leslie’s, Inc. (NASDAQ:LESL) is the retail company that sells swimming pool related products, such as supplies for pool maintenance and recreational and safety products for swimming pools. The company’s products are absolute summer essentials, especially for outdoor activities in children’s summer camps. Leslie’s, Inc. (NASDAQ:LESL) ranks ninth on our list of the best seasonal stocks to buy now.

Recently, Stifel initiated its coverage on Leslie’s, Inc. (NASDAQ:LESL) with a ‘Buy’ rating and a $28 price target. The firm’s analyst W. Andrew Carter expects the company’s revenue to reach over $1.5 billion by FY23. He also noted that the company could benefit from sourcing its products as it represents 40% of sales in the pool and spa category for Amazon.com, Inc. (NASDAQ:AMZN). In Q3 2021, Leslie’s, Inc. (NASDAQ:LESL) posted an EPS of $0.64, beating the consensus by $0.08. The company’s revenue stood at $596.5 million, beating the estimates by $24.69 million.

As of Q2 2021, the number of hedge funds having stakes in Leslie’s, Inc. (NASDAQ:LESL) grew to 35, compared with 27 in the previous quarter. The total value of these takes is $427.8 million. Dan Loeb’s Third Point is the company’s largest shareholder with over 6.1 million shares, valued at $169 million.

Like Booking Holdings Inc. (NASDAQ:BKNG), Expedia Group, Inc. (NASDAQ:EXPE), The Home Depot, Inc. (NYSE:HD), Starbucks Corporation (NASDAQ:SBUX), MGM Resorts International (NYSE:MGM), The Gap, Inc. (NYSE:GPS), and Nutrien Ltd. (NYSE:NTR), Leslie’s, Inc. (NASDAQ:LESL) is one of the investors’ top picks in 2021.

8. Vail Resorts, Inc. (NYSE:MTN)

Number of Hedge Fund Holders: 40

Vail Resorts, Inc. (NYSE:MTN) is an American mountain resort company that operates 37 ski resorts in the U.S., Canada, and Australia. The company’s resort experience, coupled with infamous skiing activities, makes it one of the best holiday destinations in the U.S., especially in winters. Vail Resorts, Inc. (NYSE:MTN) ranks eighth on our list of the best seasonal stocks to buy now.

In fiscal Q3 2021, Vail Resorts, Inc. (NYSE:MTN) posted a GAAP EPS of $6.72, beating the estimates by $0.31. The company reported revenue of $889 million, showcasing a 28.1% year-over-year growth. For FY21, Vail Resorts, Inc. (NYSE:MTN) expects a net income of between $93 million to $139 million. In June, BofA lifted its price target on Vail Resorts, Inc. (NYSE:MTN) to $375, while keeping a ‘Buy’ rating on the shares. After the company topped the analysts’ estimates in recent quarterly earnings, Jefferies lauded Vail Resorts, Inc. (NYSE:MTN) to demonstrate growth through its pricing strategy.

Of the 873 hedge funds tracked by Insider Monkey, 40 hedge funds have positions in Vail Resorts, Inc. (NYSE:MTN) in Q2 2021, up from 36 in the previous quarter. The total value of these stakes is $883.5 million.

Baron Funds mentioned Vail Resorts, Inc. (NYSE:MTN) in its Q1 2021 investor letter. Here is what the firm has to say:

“Our Consumer Discretionary investments have fared much better than the industry as a whole and are continuing to enjoying the same month-over-month improvements. For example, skier visits to Vail Resorts, Inc. through early March declined by just 8.2% from last year. Vail’s total North American destination visits declined an even more modest 5%, despite travel and capacity restrictions in December. Daily retail sales for March were up three-fold versus pre-COVID levels in 2019, and ski school was sold out during the month. Vail’s management was able to grow its season pass sales by almost 20% through creative pricing, aggressive use of data and analytics, and consistently expanding guest value.”

7. Royal Caribbean Group (NYSE:RCL)

Number of Hedge Fund Holders: 42

Royal Caribbean Group (NYSE:RCL) ranks seventh on our list of the best seasonal stocks to buy now. It is the second-largest cruise holding company in the world, with headquarters in Florida, U.S. The company is also known for its holiday cruises and different festive packages for action-packed holidays.

In June, JPMorgan raised its price target on Royal Caribbean Group (NYSE:RCL) to $123, while upgrading the stock to ‘Overweight’. In Q2 2021, the company posted an EPS of -$5.06, missing the estimates by $$0.68. In June, Royal Caribbean Group (NYSE:RCL) reported 90% more bookings each week, compared with the first quarter of 2021. Despite the fears of the Delta variant, the company has gradually restarted its presence in the key markets. Recently, Royal Caribbean Group (NYSE:RCL) announced that the booking activity for 2021 sailings complies with the company’s expected capacity and occupancy, with prices higher than 2019 levels.

As of Q2 2021, 42 hedge funds tracked by Insider Monkey have positions in Royal Caribbean Group (NYSE:RCL), worth over $596.5 million. The number of hedge funds having positions in the company remained the same in the previous quarter, valued at $594.4 million.

6. The Gap, Inc. (NYSE:GPS)

Number of Hedge Fund Holders: 43

The Gap, Inc. (NYSE:GPS) is an American clothing and accessory retailer. Some of the famous brands of the company include Old Navy, Gap, Banana Republic, Intermix, and Janie and Jack. The demand for the company’s winter outdoor apparel makes it one of the best seasonal stocks to buy now.

In Q2 2021, The Gap, Inc. (NYSE:GPS) posted an EPS of $0.70, beating the consensus by $0.24. The company generated $4.21 billion in revenues, up 28.4% from the previous year’s quarter. The Gap, Inc. (NYSE:GPS) raised its FY21 outlook and expects adjusted earnings per share in the range of $2.10 to $2.25 versus the estimates of $1.79. In August, Deutsche Bank lifted its price target on The Gap, Inc. (NYSE:GPS) to $45, while keeping a ‘Buy’ rating on the shares. The firm’s analyst appreciated the company’s solid quarter and expects it to achieve its target of 10%-plus EBIT margin by 2023. After hitting a low of $5.65 in April 2020 due to the global market crash, The Gap, Inc. (NYSE:GPS) gained 48.4% in the past year and 26.6% year to date.

As of Q2 2021, 43 hedge funds tracked by Insider Monkey have positions in The Gap, Inc. (NYSE:GPS), up from 42 in the previous quarter. The total value of these stakes is over $910 million. With over 7.2 million shares, worth $244.6 million, Arrowstreet Capital is the company’s largest shareholder.

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