3 stocks set to benefit from record Valentine’s Day spending

photo of a man with Valentine's Day packages

Key points

  • Wall Street expects a 15% year-over-year jump in fiscal first-quarter EPS for Signet Jewelers, the world’s largest diamond jewelry retailer.
  • FLWS reported flat second-quarter fiscal 2024 earnings per share on a year-over-year basis, when the forecast was for a decline of 5%, a pace driven by reductions in transportation, labor and raw material costs, as well as optimization efforts of stocks.
  • Tootsie Roll stock has been trending lower over the past 12 months amid a broader pullback in the consumer staples sector, but stronger holiday sales could energize defensive mid-caps.
  • 5 titles we like best from Signet Jewellers

Love is in the air and dollar bills are flying everywhere. And that’s not just the latest catchy country song lyrics.

Americans will spend a record $14.2 billion on Valentine’s Day cards and gifts this year. This is what emerges from a recent survey conducted by the National Retail Federation (NRF) and Prosper Insights & Analytics. In the coming days, brick-and-mortar retailers will adorn their stores with decorations and offers set to win the hearts of last-minute shoppers. Online stores are also expected to get a lot of love, with e-commerce forecast to account for 40% of all Valentine’s Day spending (up from 35% a year ago).

According to the study, the average consumer will dole out $185.81, with 25-34 year olds planning to party the most of any age group. Add to that the money spent on romantic dinners and other activities, and this year’s Valentine’s Day toll in the United States could exceed $25 billion. It’s a sign of sustained demand for experiences and resilient consumer spending in the face of inflation and high credit card rates. It’s holiday commercialization at its best.

This year’s intense shopping spending will likely see winners from a wide range of publicly traded companies. In keeping with tradition, candy and greeting cards should be the most popular gift choices. But some of the biggest spending goes to other categories. Jewelry, flowers, dresses and a night out are expected to break Valentine’s Day records.

Uber Technologies Inc. NYSE:UBERand apart from high-end restaurant chains, the theme of nights out is difficult to interpret from an investment perspective. But while consumers have plenty of choice when it comes to physical gifts, a few clear leaders may dominate their respective markets. This brings us to a jewelry store, a flower shop and a candy shop, all of which could post red-hot February financial results.

What is a good jewelry stock to invest in?

Being the largest diamond jewelery retailer in the world, Signet Jewelers Limited NYSE: MR is expected to receive a significant slice of the estimated $6.4 billion spent on earrings, necklaces, bracelets and watches. Jewelry is expected to account for nearly half of all Valentine’s Day gift spending. Many shoppers are likely to head to one of Signet’s 2,800 stores featuring various brands such as Kay Jewelers, Zales and Jared.

However, since the retailer’s fiscal 2024 fourth quarter ended at the end of January 2024, much of Valentine’s Day revenue won’t hit the books until the late April period. The company has historically reported fiscal first-quarter results in early June. Considering the holiday season and recent cost-cutting initiatives, Wall Street expects a 15% year-over-year increase in fiscal first-quarter earnings per share (EPS). It would mark Signet’s best profit growth in two years. Any weakness in the stock leading up to this report could be a glittering trading opportunity.

Will FLWS’s earnings streak continue?

1-800-FLOWERS.COM, Inc. NASDAQ: FLWS is a leading national destination for e-commerce of flowers and gourmet food hampers. In addition to its namesake flower website, the company owns Harry & David, Shari’s Berries, The Popcorn Factory and souvenir retailer Things Remembered.

Earlier this month, FLWS reported flat second-quarter fiscal 2024 EPS year-over-year, when the Street was expecting a 5% decline. The pace was driven by reductions in transportation, labor and raw material costs, as well as inventory optimization efforts.

This has set the stage for what is expected to be a stronger fiscal performance in the third quarter, which captures the key moment of Valentine’s Day. Analysts expect earnings growth of 11%. The small-cap company will report a six-quarter earnings per share streak, a streak that has helped its stock recover 55% from its September 2023 low.

Are there pastry chefs listed on the stock exchange?

From classic Tootsie Roll Pops to Cherry Lover’s Dots to Cella’s Chocolate Covered Cherries, Tootsie Roll Industries, Inc. NYSE:TR has a lot of sugary treats this Valentine’s Day season. Whether or not this translates into good financial results for the candy maker remains to be seen. Investors will have to wait until the company releases first-quarter 2024 results in April or May 2024.

First quarter 2023 results showed 15% year-over-year revenue growth, but modest earnings growth amid commodity inflation. In addition to indications of Valentine’s Day success, financial data from the first quarter of 2024 will likely offer clues to production cost disinflation and the potential for stronger profits this year.

Meanwhile, Tootsie Roll will announce its fourth-quarter 2023 results after the close on Feb. 20. Its shares have been on a downward trend over the past 12 months coinciding with a broader pullback in the consumer staples sector. However, strong Christmas and Valentine’s Day sales could energize defensive mid-caps.

Before you consider Signet Jewelers, you’ll want to hear this.

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