Moving the Market
Traditionally, the day after Thanksgiving - also known as "Black Friday" - marks the beginning of the holiday shopping season. While the media and investors alike have typically focused on sales during this holiday weekend as a bellwether of anticipated retail sales for the year, there are other metrics that can give investors an edge in capitalizing on the huge dollar volume of sales during this five to six week shopping season.
By analyzing the stock performance of companies that are retailers or suppliers to the retail sector, we uncovered a price trend in the week following Black Friday and identified the sub-sectors that outperformed the overall market and primary retail stock benchmark.
By comparing the broader market to the retail sector for the week following Black Friday, the S&P Retail Index outperformed the overall S&P 500 each year for the past three years.
click to enlarge images
Revere Research Reveals
By further analyzing the drivers behind this recurring investment opportunity, we were able to identify sub-sectors that outperformed the broader S&P Retail Index. Specifically, we found two sub-sectors within the Revere Consumer Retailing Sector that have outperformed the market during the crucial one-week time period following Black Friday in each of the past three years:
Footwear Stores: Ten companies that are focused on footwear stores that sell athletic, casual, and dress shoes. Top companies in this sector include:
- Collective Brands (NYSE:PSS) with a 28.1 percent three-year return
- The Finish Line, Inc. (NASDAQ:FINL) with a 25.5 percent three -year return
Women's Wear: Nine companies that focus on women's apparel, including formal wear rentals. Top companies in this sector include
- Coldwater Creek, Inc. (NASDAQ:CWTR) with a 27.8 percent three-year return
- Christopher & Banks (NYSE:CBK) with a 25, 8 percent three-year return
Digging a level deeper in our analysis, we mapped retail suppliers to determine the strongest performers within the same time frame.
Specifically, the two supplier sectors are comprised of companies that manufacture apparel, as opposed to companies involved in providing services or support for retailers for the week after Black Friday.
Premium Wear: Eight manufacturers of premium wear apparel, including evening/weekend wear
- Guess?, Inc. (NYSE:GES) with a 20.5 percent three-year return
- Liz Claiborne, Inc. (LIZ) with a 13.6 percent three-year return
Casual/Dress: Eight manufacturers of footwear designed and produce3d for non-athletic, casual or formal use.
- Deckers Outdoor (NASDAQ:DECK) with a 23.5 percent three-year return.
- Crocs Inc. (NASDAQ:CROX) with a 16.2 percent three-year return.
In terms of non-manufacturing sectors that have typically fared well in the week after Black Friday during the past three years, we identified two key groups:
Online Marketing and Advertising Support Services: Providers of a wide variety of marketing and advertising support solutions for online businesses (paid search advertising, search-and-call based advertising, etc.) including internet lead aggregation services.
- Marchex, INc. (NASDAQ:MCHX)
- ValueClick, Inc. (VLCK)
Retail REITs: Equity REITs engaged in the ownership and/or operation of retail properties, including entertainment complexes such as cinemas.
- Glimcher Realty Trust (GRT)
- Gerneral Growth Properties (NYSE:GGP)
To give viewers a broader perspective on these companies and the sectors in which they compete, we built a portfolio of 66 companies focused in the aforementioned sectors with a market cap of more than $50 million.
We backtested this portfolio's performance for the week after Black Friday over the past five years and found that it consistently outperformed the S&P 500 in every year, and the S&P Retail Index in four of the past five years.
Disclosure: No positions in stocks discussed.