Whether this is down to a festive fervour in the City, a boost to retail or is just purely coincidence is highly debatable. However for those looking to take a punt, Graham Spooner, investment research analyst at the Share Centre, tips those stocks he believes will see a Christmas boost.
Diageo
Spooner says this mega-cap stock, whose brand names include Bailey’s, Gordon’s, Guinness and Smirnoff, could see sales rise over Christmas thereby boosting its share price.
Over the past year the stock has gained 4.09 per cent, less than the FTSE All Share, but it did live up to its defensive reputation in the September sell-off when it lost less than half the fall in the index.
Performance of stock and index over 1yr
Source: FE Analytics
“A trading update in October covering Q1 showed a 1.5 per cent drop in sales, which was in line with expectations. Nevertheless, the company said it expects full-year top line growth to improve,” Spooner said.
“The shares are trading on a 2015 PE of 20 and a dividend yield of 2.8 per cent, which are both good relative to its peers Remy Cointreau and Pernod Ricard.”
Booker
Spooner says this food wholesaler may be a beneficiary of a rise in consumer sentiment as he believes an improving economic outlook will mean more families venture out for their Christmas meal.
“The company, which also serves over 400,000 caterers, has delivered some strong numbers this year against a tough trading environment,” he said.
Before September’s correction the stock was having a difficult year and was on a downward trend but it has rebounded much faster than the rest of market and is up more than 20 per cent.
However, its losses in the first three quarters of 2014 mean it is still down 8.83 per cent over one year.
Performance of stock and index over 1yr
Source: FE Analytics
Spooner says the group’s shares are trading on a 2015 PE of 22 times, which is above average in the sector, but the company has delivered a strong performance since CEO Charles Wilson took over.
“There is a dividend yield of 2.4 per cent and this is likely be boosted in 2015 by a return of capital to shareholders,” he added.
Marston’s
Similarly to Diageo, Spooner says that a trip to the local pub will be on the cards for many people this Christmas so he thinks this brewer and pub group could stand to benefit.
However Spooner says the company is very weather dependent and so will hope that the wintery showers stay away to allow more people to come through its doors.
Over the past year it is up 5.47 per cent, slightly less than the FTSE All Share, and its performance has been more volatile, as the graph below shows.
Performance of stock and index over 1yr
Source: FE Analytics
The brewer of Pedigree, Banks’s Bitter and Jennings Cumberland Ale has been offloading pubs in favour of new openings with a greater focus on food.
“Marston’s recently reported that its full-year figures were in line with market expectations. The group has been transforming its pubs assets by developing franchise style pubs which now generate roughly 75 per cent of the company’s profits and give it better control over the retail offer,” Spooner said.
“The shares are trading on a forward PE of 11.3 and the prospective dividend yield of 4.9 per cent is very good. The strengthening UK economy alongside the fact that disposal proceeds are being recycled into higher returning new pubs could provide a sales boost for the company.”
Burberry
Spooner says this high-end British fashion giant may see a boost to its sales of luxury clothing as consumers around the world go present shopping.
“Its seasonal advert, which includes David Beckham’s son Brooklyn, has been well received and the group will hope this entices more customers,” Spooner said.
“Under the new CEO, the company has had a relatively smooth transition with the first half 2015 results showing some promise. Burberry still expects new store openings to contribute to sales growth and believes it is well positioned to make the most of the festive period.”
Aggressive global expansion has meant its share price has rocketed over the past five years with the past year seeing a gain of 15.21 per cent.
Performance of stock and index over 1yr
Source: FE Analytics
Sainsbury’s
Having lost more than a third of its value over the past year, this is arguably Spooner’s most contrarian stock pick for Christmas.
Performance of stock and index over 1yr
Source: FE Analytics
However, he says Christmas trading and a recent joint venture aimed at broadsiding the march of the discounters will help it recover some losses.
“The supermarkets are already fighting for our custom in the run-up to the sector’s busiest trading period and Sainsbury’s will be hoping to maintain its market share. By selling a wide range of food, decorations, gifts and seasonal clothing, the group could have a merrier Christmas than feared.”
“Sainsbury's has teamed up with Danish discounter Netto to open up a number of stores in the UK to help it combat the challenges it is facing from the discount chains Aldi and Lidl.”
Spooner says a new strategy for setting and matching prices, as well as lowering prices on thousands of products make it valuation look interesting.
“It is trading on a forward P/E of nine times and there is a dividend yield of 5.1 per cent.”
