Valentine Gifts for Your Portfolio

Kristin Orman By Kristin Orman, Research Analyst, The Oxford Club

Dividend Investing

Americans may not love the stock market right now, but they sure love each other. And they are willing to spend a lot of money to show it.

The National Retail Federation (NRF) says that spending on Valentine’s Day this year climbed to a record high of $19.7 billion. But even if you didn’t participate in yesterday’s holiday, there may still be time for cupid’s arrow to give your portfolio a lift.

Valentine’s Day is the fourth-largest occasion for consumer spending. As the first holiday of the year, it’s an important event for retailers.

Nearly 55% of consumers celebrated the holiday this year. They spent an average of $146.84. That’s up 3.2% from the $142.31 they spent in 2015.

Let’s take a look at some of the companies that stand to benefit from this year’s Valentine’s Day splurges.

The Sweet Stuff

More than half of the NRF survey respondents said they planned to buy candy. They spent $1.7 billion in total. That buys a lot of chocolate.

Mondelēz International (Nasdaq: MDLZ) could benefit from the Valentine’s Day sugar high. Given that 81% of Americans eat chocolate, Mondelēz’s Cadbury and Toblerone brands should have seen an uptick in sales.

The Hershey Company (NYSE: HSY) may also do well. The candymaker’s heart-shaped confections are popular Valentine’s Day gifts, especially for budget-minded consumers.

Roses and Rosé

Nothing says Valentine’s Day like a dozen roses and a bottle of bubbly. This year, Americans spent $1.9 billion on flowers. The holiday is the No. 1 day for fresh flower purchases and makes up 20% of all floral transactions. (Nasdaq: FLWS) was surely busy delivering bouquets over the weekend.

Romance and wine are almost a given on this special day for couples. Constellation Brands (NYSE: STZ) has couples and its investors covered. Constellation Brands calls itself the world’s leading wine company.

Its diverse portfolio of wines includes Robert Mondavi, Ravenswood and many other well-known brands. With so many bottles in the grocery store aisle, there is a good chance one of Constellation’s brands will wind up in the carts of last-minute Valentine’s Day shoppers.

Diamonds Are Forever

Americans spend more money on jewelry than on anything else for their valentines. The NRF forecasts $4.4 billion in jewelry sales alone.

The first quarter is typically the second-largest in terms of revenue for Signet Jewelers (NYSE: SIG). Sales are driven by Valentine’s Day promotions, as are the sales of Jared, Kay, Zale’s and other jewelry store chains. The company has been heavily advertising its exclusive heart-shaped jewelry collections. It should have gotten a large chunk of Valentine’s Day gift purchases.

But you may not be willing to open your heart to diamonds. American Express recently conducted a survey among attached but unwed men and women. Just 8% of those surveyed said they were planning on popping the question on Valentine’s Day. That’s down from 12% last year.

Diamond prices are down double digits from this time last year. That’s because supply is outpacing demand as miners produced more diamonds to make up for the freefall in prices of other commodities.

The miners aren’t the only ones that have suffered. Online jewelry retailer Blue Nile Inc. (Nasdaq: NILE) noted volatile diamond prices on its fourth quarter conference call last week. Its revenue fell nearly 5% from a year ago. Going forward, the company expects prices to stabilize, but blamed part of its cautious guidance on the present market for the stone.

Cupid’s Arrow Could Calm the Markets

Consumers may be confused by what is going on in the stock market, but they aren’t cutting back. If anything, they are spending more. Hopefully the higher spending over Valentine’s Day provides a much-needed lift to consumer sentiment, the economy and your portfolio.

Good investing,