Seasonal Stocks

Seasonal stocks are those that tend to experience predictable patterns of price movements and trading activity at certain times of the year due to the cyclical or seasonal nature of their business operations.

We look at the details of seasonality in the stock market and some examples.

Key Takeaways – Seasonal Stocks

• Here are some seasonal sectors in the stock market (one could expect the stocks within them to have seasonal patterns as well):

• • Retail
  • Consumer Discretionary
  • Consumer Staples
  • Airlines
  • Resorts/Hotels
  • Restaurants
  • Apparel
  • Utilities
  • Construction
  • Agriculture
  • Energy
  • Heating/Cooling Systems
  • Natural Gas
  • Tax Services
• Here are some examples of seasonal companies (that are publicly traded):

• • Amazon
  • Walmart
  • Target
  • Home Depot
  • Lowe’s
  • Delta
  • United Airlines
  • Marriott
  • Hilton
  • McDonald’s
  • Starbucks
  • Gap
  • Abercrombie & Fitch
  • Consolidated Edison
  • PG&E
  • D.R. Horton
  • Lennar
  • Deere
  • Mosaic
  • Occidental Petroleum
  • Halliburton
  • Carrier
  • H&R Block
• It’s important to understand that seasonality is typically pretty well priced into a company’s shares. Deep, careful research is required to understand seasonal patterns that aren’t accurately priced into the market.

Here’s a rundown on seasonal stocks and how to potentially utilize them in your trading:

What Are Seasonal Stocks?

Predictable Patterns

Seasonal stocks exhibit price trends that tend to occur at specific times of the year due to various recurring factors.

Demand Fluctuations

Often driven by seasonality in consumer spending, business cycles, or even weather patterns.

Common Categories of Seasonal Stocks

Here are some key points about seasonal stocks:

Consumer Goods

Companies that sell products related to holidays, seasons, or weather patterns often see increased demand during those periods.

Examples include retailers during the holiday shopping season, beer companies in summer, winter apparel makers, etc.

Holiday Retail

Stores and companies associated with holiday shopping (like Walmart, Target, Amazon) usually see rises in sales leading up to major holidays.

Outdoor/Recreation & Loding, Leisure and Travel

Businesses tied to outdoor activities like golf courses, swimming pool suppliers, travel companies, etc., typically have higher sales in warmer months.

Airlines, hotels, and cruise lines tend to experience peaks around popular vacation periods (summer, spring break, holidays).

Home Improvement

Companies selling items like lawnmowers, air conditioners, patio furniture tend to peak in spring/summer when homeowners work on their yards and houses.

Energy

Natural gas and heating oil companies see increased demand in winter months for heating purposes.

Air conditioning demand drives electricity usage in summer.

Agriculture

Stocks of companies involved in agricultural commodities like grains, fertilizers, farm equipment often move with planting and harvesting cycles.

Same with livestock like cattle and lean hogs.

Tax Services

Firms like H&R Block see a surge around tax filing season in early spring.

“Back to School”

Retailers and manufacturers of school supplies often see an uptick in late summer before the school year.

Examples of Seasonal Stocks

Winter-Oriented Stocks

Apparel

Retailers specializing in winter gear like Columbia Sportswear (COLM) and North Face (owned by VF Corporation (VFC)) often see increased demand in the colder months.

Recreation Equipment

Companies selling snowmobiles, ski equipment, etc., like Polaris (PII) tend to peak during the winter season.

Utilities

Companies providing heating solutions like natural gas may experience higher demand (and potentially price increases) in colder climates.

Summer-Specific Stocks

Amusement Parks

Six Flags (SIX), and Cedar Fair (FUN) see major surges in attendance during the summer months.

Beverages

Companies like Coca-Cola (KO) and PepsiCo (PEP) might experience higher sales with increased demand for cold beverages during warmer weather.

Outdoor Products

Retailers of camping gear, pool supplies, and similar products can see a temporary boost during the summer.

Tax Season Influences

Tax preparation software

Companies like Intuit (INTU), the makers of TurboTax, experience a significant boost leading up to and during tax season.

Investment Firms

Brokerage firms, especially those specializing in self-directed retirement accounts, may see increased activity around the end of the year or tax season as people reposition their investments and portfolios.

Other Notable Examples

Fireworks

Companies specializing in fireworks displays often see their biggest sales around holidays like the 4th of July in the US.

Halloween

Costume retailers like Spirit Halloween or candy companies may exhibit strongly seasonal patterns.

And so on for companies that cater to major holidays.

Retail (Walmart, Amazon, Target)

In addition to major holidays, back-to-school season can be a significant demand driver.

Travel (Expedia, Marriott, Delta)

Spring break and extended holiday weekends offer additional seasonal peaks beyond major summer vacations.

Construction (Home Depot, Lowe’s)

Spring is a strong season as homeowners undertake renovations and yard work after the winter.

Commodities (Deere)

Planting and harvesting seasons drive demand for farming equipment throughout the year.

Things to Know

Investors may try to buy seasonal stocks before their peak demand periods in anticipation of higher earnings and then sell them off afterwards when business slows down.

However, these patterns are usually well-known and priced into stocks already.

While seasonality can impact business trends, many seasoned investors look past short-term season effects and focus on long-term fundamentals when evaluating companies.