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Halloween Is Big Business. Some Treats for Your Portfolio?

October 6, 2017
Halloween: Ideas for investing in holiday business
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Halloween is right around the corner, and not only is it a big hit with kids, it’s also big business.

According to the latest data available from the National Retail Federation (NRF), which has tracked the holiday since 2003, total spending for 2016 hit a record $8.4 billion. And with more than half the U.S. population planning to celebrate this year, spending an average of $82.93 each, 2017 could shape up to be another record year.

Treats, No Tricks

Not surprisingly, the biggest Halloween activity is handing out candy. NRF’s survey shows that 7 in 10 consumers plan to give out treats. The recipients of those treats—according to the U.S. Census Bureau—will largely be children ages 5 to 14, although in total an estimated 41.1 million trick-or-treaters will be heading out this year.

The actual figure could be higher, of course, since many other children outside those age ranges also go trick-or-treating. (And there’s no estimate on who eats more Halloween candy, adults or kids.)

It’s easy to sugar-coat the holiday, but that could lead to a little indigestion. The Census Bureau also noted that as of 2015, the U.S. chocolate and cocoa industry’s shipments totaled $16 billion, while shipments by non-chocolate confectionary products totaled $8.2 billion in 2014.

No Need to Get Spooked

You might not want a witches’ brew in your portfolio, but there are many ways to think about adding a little holiday spirit. The top candy manufacturers also make many Halloween treats. Pure-play confectioners include The Hershey Company (HSY), Rocky Mountain Chocolate Factory (RMCF), and Tootsie Roll Industries (TR).

Hershey’s owns many of the brands on the market, including ones that don’t carry its moniker, like Dagoba Chocolate and Scharffen Berger Chocolate Maker. Rocky Mountain Chocolate Factory is known for its candy and retail stores in the U.S., but also operates locations in Canada, Japan, the Philippines, and the United Arab Emirates. Tootsie Roll makes almost 30 different sweets, including Junior Mints and DOTS.

NRF says online search and retail stores are where more than 50% of Halloween celebrants get their costumes, with most of the other 50% surveyed hitting discount stores. That could mean shoppers may visit the big retailers like Amazon (AMZN), Target (TGT), and Wal-Mart (WMT) for supplies.

Want to think outside the pumpkin? Consider entertainment. Spooky movies are a staple of Halloween. Netflix (NFLX) will likely stock a bounty of scary flicks, and Lions Gate Entertainment (LGF) distributes many horror films, like the Saw series, American Psycho, and the new movie Jigsaw, slated for a Halloween release. Theater chains like AMC Entertainment Holdings (AMC), Cinemark (CNK), and IMAX (IMAX) may also indulge in fright fests with showings of classic or new film releases to draw out crowds.

Make no bones about it, Halloween can be a fun way to think about the magic of investing.

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