Jasmine Birtles
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5 Stocks to Buy Before Black Friday
Ruby Layram
31st Oct 2024
Can you believe that it’s nearly November? I’m personally more than ready for the shops to replace skeletons with Christmas trees and to start planning my Christmas market trips!
For investors, the festive season represents a great time to take advantage of seasonal trends. Events like Black Friday, Cyber Monday and Boxing Day Sales encourage people to spend more money, which is pretty great for companies!
If you want to take advantage of seasonal trends, it’s best to invest before all of the excitement begins. In this guide, I will share 5 stocks to watch before Black Friday to help you get started.
Of course, there is no knowing for certain whether any of these stocks will generate returns. However, it’s worth adding to your watch list to find out!
What Companies Tend to Do Well Around Black Friday?
Black Friday is an exciting time for businesses that are involved in the retail sector, both online and in-store. More people flock to the shops to take advantage of sales and buy gifts for loved ones.
But it’s not just the shops that do well. eCommerce platforms, banks, payment processors, and delivery companies all play crucial roles in handling the Xmas shopping frenzy.
As I mentioned above, it’s impossible to predict the future. However, companies that are involved in retail (in any way, shape, or form) might experience a boost during the holidays.
5 Stocks to Add To Your Watchlist Before Black Friday
If you want to take advantage of seasonal growth, it’s a good idea to start considering your options before Black Friday. Why? Because growth doesn’t happen overnight. It can take weeks, or even months, for the full effect of the holiday season to kick in.
With that being said, here are 5 stocks to watch before Black Friday.
1. Amazon
You probably aren’t surprised to see Amazon at the top of the list. Amazon is the king of online retail and the biggest eCommerce platform in the world. Its reputation for fast delivery, a huge range of different products and brands and trusted sellers puts it in a prime (pun intended!) position to reap the rewards of Black Friday shopping.
In the last quarter of 2023 (Q4), Amazon bought in a whopping $170 billion in profit! Jeff Bezos must have had a brilliant New Year. There is no reason why the eCommerce giant couldn’t see similar returns this year, with some experts predicting that Amazon could bring in $186 billion.
Amazon continues to rule as the largest eCommerce platform and has been increasing its additional product offerings including its Prime subscription, its Kindle services and Fire TV. So, the company has a lot of potential in the eyes of investors.
For those interested in Amazon, consider buying shares a few weeks before Black Friday to allow some breathing room for any pre-holiday sales fluctuations. Amazon is a big player, so even a small stock increase around the holidays can be meaningful. But bear in mind Amazon’s higher price tag—fractional shares can be a great way to start small with a stock of this size.
If you’re interested in AMZN stock, you might also be interested in these 5 dividend stocks that I’ve got my eye on!
2. PayPal
With the increase in online shopping during Black Friday, payment platforms like PayPal experience a huge surge in transaction volume. PayPal is one of the most widely used online payment systems, making it an essential service during the holiday rush.
At the time of writing, PayPal is used by 36 million different online retails in over 165 different countries. That’s a pretty big market and its no wonder that this stock often experiences a spike during the holiday season.
As people scramble to snap up deals online, PayPal benefits from fees on each transaction. Furthermore, PayPal now offers a ‘Buy Now, Pay Later’ service which makes the payment method even more attracted, particularly for high-ticket purchases.
If you’re interested in investing in PayPal, it might be wise to buy in as early as possible during the holiday season. PayPal’s stock often sees bumps leading into and following major shopping events, so keep an eye on its pricing trends in the weeks ahead.
3. Walmart
If you’ve ever ventured over to the US, you probably would have seen quite a few Walmart stores dotted around. This is because the retail company is one of the biggest retail companies in the world (by revenue), which makes it a powerhouse during the holiday season.
As well as owning thousands of physical stores around the world, Walmart has a very strong online presence. This means that the company can benefit from both foot traffic and increased online shopping.
And it’s not just the Walmart stores that become increasingly profitable at this time of year. Walmart owns a number of smaller brands that could also do well during the festive period. Brands such as Sam’s Choice, Parent’s Choice and Great Value all offer popular products that could experience a spike in demand.
Walmart is a solid long-term investment, as it’s a staple in the retail industry. If you’re thinking of buying Walmart stock in the UK, you will need to find an investment platform that offers access to the US stock market.
4. Shopify
Shopify is an eCommerce platform that hosts millions of huge online businesses including Gen Z favourites such as Tala and Gymshark. During Black Friday, Shopify merchants see record-breaking sales, as shoppers swarm their favorite small businesses for holiday gifts.
In Q4 2023, Shopify’s revenue increased by 24% compared to the previous Q4 results. The total revenue was $2.1 billion and Gross Merchandise Volume was $75.1 billion – those are some pretty big numbers!
In 2024, online shopping is bigger than ever – amplified by the marketing powers of TikTok. So, I see no reason why Shopify won’t produce the same mouthwatering results.
5. Lloyds
Black Friday isn’t just about shopping,. It’s also a busy period for financial transactions. Lloyds is one of the oldest and most reputable banking providers in the UK which means that it experiences heightened demand around Christmas and Black Friday.
The bank benefits from increased consumer spending and borrowing, which is excellent news for investors!
Not only is Lloyds a great pick for Black Friday, the stock also pays generous dividends which makes it an excellent addition to your long-term investment portfolio. At the time of writing, the dividend yield in 5.32% which could be pretty lucrative over time.
Top Tips for Investing Based on Seasonal Trends
Investing around seasonal trends could be a good way to see returns in a relatively short period. However, this kind of investing can also be risky. There is no guarantee that trends will repeat themselves.
Nevertheless, here are some top tips for investing in seasonal trends.
1. Start Early
To take advantage of the full trend cycle, it is important to by your stocks early. The longer you wait to jump on a trend, the higher your chances will be of missing it.
As we have already mentioned, it is impossible to predict market behaviour and to know when stocks will reach their peak. By investing early, you can prepare your portfolio for whats to come.
2. Diversify Your Picks
While it’s tempting to go all-in on retail stocks during the festive period, it’s wise to diversify. Mix e-commerce, banks, and delivery stocks to protect yourself from any sector-specific downturns.
3. Monitor Earnings Reports
Companies often release their Q3 earnings just before Black Friday. These reports can give you a sneak peek at how well the company is positioned for the holiday rush. If they report strong Q3 performance, it may indicate a strong Black Friday ahead.
Check out our guide on how to read earnings reports to get started.
4. Don’t Just Buy; Have an Exit Strategy
It’s important to know when to sell. Black Friday excitement can lead to temporary stock price spikes, so if your goal is short-term gains, plan an exit strategy. This doesn’t mitigate risk completely. However, having a clear exit strategy can prevent you from getting too attached to your investments and missing your chance to pocket profits.
Black Friday offers an exciting opportunity to get involved in seasonal investing. Amazon, PayPal, Walmart, Shopify, and Lloyds are amongst the many companies that could benefit from the Christmas shopping rush. But remember that timing and diversification are key. So, take a close look at these stocks, do a bit of research, and only invest money that you can afford to lose.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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