Although Christmas is about giving, which is the opposite of being selfish, the holiday season is one when investors can get greedy. If you're looking to open some profits for the holidays, you've got a good chance of finding what you're looking for. In the 32-year period leading up to 2012, stocks more often than not gained value during Christmas week, according to a 2012 article on the "Forbes" website. While you can't bank on stock-market gains no matter what the season, as stocks offer no warranties, you can find sectors where yuletide cheer is running high during the holiday season.
There's a reason why the phrase "Black Friday" was adopted by retail companies. It represents the day after Thanksgiving, and holiday sales on this day can bring retailers out of the "red," or financial loss, and into the land of profits, or in the "black." In fact, retailers can earn as much as 40 percent of their annual sales during the holiday months, according to a 2012 article on the "Los Angeles Times" website. Investors who are looking to capitalize on this seasonal trend may buy shares of apparel, jewelry or discount-retailer stocks, for example, in hopes that the positive sentiment will continue through Christmas. In 2012, leading retailers had banner Black Friday sales, which drove shares of individual retail stocks higher and helped the S&P 500 index to its best weekly performance of the year.
During the 2012 holiday shopping season, online sales were growing at a faster clip than sales at brick-and-mortar retail locations, according to a 2012 article on "The Wall Street Journal" website. This momentum stands to benefit transportation stocks, including those of trucking and air-freight businesses. You can expect to see a bump in transportation stocks during the holidays, as some delivery companies experience their busiest days of the year during the Christmas season, according to a 2012 article on the CNBC website.
You may find that the best-performing stocks during the Christmas season are those companies behind the latest fads, whether it be in best-selling toys or new electronics. During a technology revolution at the start of the 2000s when companies were making computer tablets and smartphones, industry leader Apple was leading the charge with its iPhone and iPad devices. In the three years leading up to 2011, Apple's stock price consistently rose between the day after Thanksgiving and the last day of December, according to a 2012 article on the "Forbes" website. Nothing lasts forever, and in 2012 when Apple's sales suffered, so too did performance in its stock price.
Santa Claus Rally
Historically, the broad stock market stages what's known as a "Santa Claus rally," which gives a lift to stock prices across sectors. Starting on the last official trading day before Christmas and continuing through the final trading session of the year, the Santa Claus rally has been relatively dependable. Since the Dow Jones industrial average was created at the end of the 19th century, the index has delivered average gains of more than 1 percent during the Santa Claus rally, which is "far higher" than the average weekly returns outside of this period, according to a 2012 article on the Market Watch website.
- Los Angeles Times: Stocks Rise Sharply on Black Friday to End Best Week of Year
- Forbes: Apple's Historical Stock Price Moves from Christmas to January 31
- CNBC: FedEx Hopes Busiest Day of the Year Is a Record-Breaker
- The Wall Street Journal: UPS, FedEx Escalate Holiday Shipping War
- Forbes: Holiday Trading Usually Cheery for Stocks
- Fox Business: Dreaming of a Green Christmas? December Tends to Favor Stocks
Geri Terzo is a business writer with more than 15 years of experience on Wall Street. Throughout her career, she has contributed to the two major cable business networks in segment production and chief-booking capacities and has reported for several major trade publications including "IDD Magazine," "Infrastructure Investor" and MandateWire of the "Financial Times." She works as a journalist who has contributed to The Motley Fool and InvestorPlace. Terzo is a graduate of Campbell University, where she earned a Bachelor of Arts in mass communication.