Stocks That Perform Well During the Christmas Period

The Christmas season is the time of year known for celebrating, giving, traveling and spending time with friends and family. And while you may be thinking more about tinsel and turkey than about investment strategies, the holiday season often provides some impressive stock market returns for investors who own certain categories of shares and who acquired them prior to the holiday season. Indeed, while Christmas performance may bring you returns, wise investing is a long-term process, not one that you can simply jump into as the season unfolds.

Not surprisingly, retail stocks can be big performers during the Christmas season. According to Forbes, stocks that perform well during the holiday season range from big box retailers like Home Depot to online retailers like Amazon. The day after Thanksgiving, also known as Black Friday, can be a good indicator of how retail stocks will perform.

Retailers that do well during the late summer and early fall "back-to-school" weeks also may have strong seasons around Christmastime. The “back-to-school” period is the second-largest retail season of the year.

Of course, poor retail performance during the Christmas season -- or failing to meet Wall Street's expectations -- can drive stock prices down.

With the growing popularity of online retail, many brick-and-mortar establishments have moved a good deal of their retail operations into the online space, creating a greater opportunity to drive sales during the holiday season (and year-round for that matter). Additionally, several large online-only retailers, such as Amazon.com, Zappos.com, Overstock.com and many others, see increased performance during the Christmas season.

If you won’t be “home for Christmas,” this year, you’re probably not alone. And that’s why shipping services like UPS and FedEx usually perform well during the holiday season. The biggest shipping day of the year often is about a week before Christmas, and large shippers frequently hire additional help during the weeks from Thanksgiving to Christmas. Additionally, air, freight and ground shipping increase in volume during the holidays, and shipping company stocks can provide solid returns for investors who already own them. In 2017, FedEx’s stock price rose to approximately $252.60 on December 20 from approximately $231.72 on December 1.

Not having cash on hand doesn’t keep shoppers out of the malls at Christmastime. That’s why Forbes reported that many investors favor companies such as American Express and PayPal during the holiday season. While credit cards are a common method of payment at retail establishments, many shoppers opt for PayPal for e-commerce transactions. Credit card use tends to increase as the economy improves because Americans begin to feel more comfortable with debt. If you previously purchased this type of stock at a lower rate, you may see some healthy returns due to holiday performance.

While certain stocks perform better than other during the Christmas season, Wall Street in general tends to perform favorably in December, and daily returns during December are higher than average. The Standard & Poor's 500-stock average has posted gains in December 84 percent of the time since 1988, and tends to average a higher return than any other month.