Sweet Stocks to Ask to Be Your Valentine

Love is in the air and could be in your portfolio.

Valentine’s Day is right around the corner, and spending on this holiday remains sweet for some industries. According to 2019 data from the National Retail Federation (NRF), people who celebrate the holiday were expected to spend $161.96 on average, with $20.7 billion spent overall.

For a holiday that’s supposed to be about tokens of appreciation for a loved one, we’re shelling out more than just a few bucks. And the industries that are most closely associated with the holiday, such as candy manufacturers, florists, jewelers, and experience vendors, could benefit, according to Michael Kealy, education coach at TD Ameritrade.

“The companies involved in the holiday will see, in all likelihood, a bump as a result of the splurging that takes place,” he said.

Valentine Spending Is Up

Even though only 51% of people surveyed said they were celebrating Valentine’s Day, spending has increased over the years. In 2009, the average spend was at $102.50, with overall spending at $14.7 billion that year. By 2019, those figures had risen 58% and 40%, respectively.

The top two categories for gifts are candy and flowers, according to NRF’s survey, with 52% of people giving sweets. Kealy noted two pure-play publicly traded confectionary companies: Rocky Mountain Chocolate Factory (RMCF) and Hershey (HSY). RMCF is known for its gourmet chocolates and other candies, and its stock has slowly trended higher since late 2018.

Hershey makes its eponymous brand of chocolate (including the Kiss, so appropriate for Valentine’s Day), and the Pennsylvania-based company also boasts a vast portfolio of chocolate company names, including higher-end brands like Scharffen Berger Chocolate Maker and Dagoba Chocolate. HSY is at the upper end of its year-long trend.

Candy sales around Valentine’s Day are important for U.S. manufacturers too, according to the Census Bureau. Using data from its 2016 survey of manufacturers, the bureau estimated that the value of chocolate confectionary products shipped by manufacturers in the United States was $16.1 billion, while nonchocolate candy was $10.7 billion.

Flowers remain a popular gift, with NRF noting 35% of people surveyed said they would give their Valentine some blooms. A company like 1-800-Flowers.com (FLWS), which ships nationwide, could see an uptick in business, Kealy suggested. FLWS's price has come down significantly from its 52-week highs.

Although jewelry isn’t as popular a gift as it once was, according to NRF, it’s the gift with the highest individual price point, at $30.34 per person, or $3.9 billion spent overall. The Census Bureau’s data showed the estimated value of jewelry and silverware shipped by manufacturers in the United States was $6.5 billion.

Kealy pointed out the chart for Signet Jewelers (SIG) might look promising. The company's strong holiday sales may have helped push the stock price higher. SIG is the world’s largest retailer of diamond jewelry and owns well-known, mid-priced brands such as Kay Jewelers, Zales, and Jared. Were you thinking a little more upscale? Luxury brand conglomerate LVMH (LVMUY)—which announced in November it had reached a deal to buy Tiffany & Co. (TIF)—owns several other high-end names such as Louis Vuitton, TAG Heuer, and Bvlgari.

For those who celebrate, age is nothing but a number. Slightly more than half of people ages 18 to 54 said they would participate in Valentine’s Day, while that number dips to 49% for the 55 to 64 age group and 46% for those over 65. Some of us stay romantic all our lives. 

Beyond the Valentine’s Day Trifecta

Kealy suggested investors might want to think beyond just candy, jewelry, and flowers when it comes to Valentine’s Day and consider experiential gifts as well. A date night would probably come in right around the average spend for the holiday.

The traditional date-night activity, dinner and a movie, can be part of a portfolio too. Kealy mentioned that Darden Restaurants (DRI), which owns inexpensive chain restaurants like Olive Garden, and two movie-theater chains, Cinemark Holdings (CNK) and AMC Entertainment (AMC), offer low-cost experiences.

IMAX (IMAX) is also a publicly traded cinema company, although Kealy suggested it might not show the traditional Valentine’s Day movie fare.

Even those who don’t participate in the holiday may mark the occasion, with 49% of women and 40% of men treating themselves to a little something-something.

Clothing is starting to uptick in gift-giving, NRF noted, matching jewelry. The percentage of people giving gifts of jewelry is at 18%. Kealy remarked that a firm such as popular retail apparel company Lululemon (LULU) could be the recipient of those gift-giving dollars, whether for a special someone or yourself. “While it might seem a little different to list LULU as a recipient of Valentine’s Day dollars, I don’t see why not. The younger demographic would likely see it as viable in terms of a Valentine’s Day gift for a significant other,” he said.

Or, of course, you could always treat yourself with a new addition to your portfolio.