Some investment considerations for Valentine's Day
February 14 is Valentine's Day and the ultimate test of the resilient consumer. The spectacular increase in cocoa and sugar prices also stands out. And the lack of stocks that offer exposure to Valentine's themes, from flowers to gift cards. A historic 'Valentine's Day' stock market effect is a lesser-known technical support for markets.
Fifth largest consumer event of the year for Valentine's Day with $182 spent
Valentine's Day is the fifth-highest spending event of the year. After back to school/college, Christmas, and Mother's and Father's Day. In the United States, it is predicted that romantics will collectively spend $26 billion, or an average of $182 per person. This is the latest test for the resilient consumer who has almost single-handedly kept America out of recession. Helped by both strong employment growth and rising inflation-adjusted wages. Sweets, cards, flowers, an evening party, jewelry and clothes are the most common gifts. While 31% plan to buy their pets a Valentine's gift. This is more than for friends (28%) or co-workers (16%).
Sweets lead the current price of cocoa, but at their highest level of all time they make it more expensive
But that box of chocolates is going to cost more. Candy inflation in the United States is reaching more than double the general rate. Cocoa prices doubled to a record high of $5,200 per ton last year. While El Niño caused crop disruptions in the dominant producers of West Africa, Ivory Coast and Ghana. And it can get worse before it gets better. As manufacturers such as Barry Callebaut (BARN.ZU) and Nestlé (NESN.ZU) of Switzerland or Hershey (HSY) of the US have lower priced inventories and must raise prices. While West African producers wait for the next harvest in October, or years until the new plantations mature.
Stocks related to Valentine's Day are not well represented on the stock market
There are only a few chocolate-related stocks, and these have been declining after Mars bought Hotel Chocolat. There are very few who are directly exposed to Valentine's trends. 1-800-Flowers.com (FLWS) is one of the few publicly traded flower stocks, but it has a market capitalization of less than $1 billion and is forecast for a near double-digit sales decline. Greeting cards are a similar story, with giants like private Hallmark and those on public markets, like Britain's Moonpig (MOONM.L), small and suffering since its 2021 initial public offering.
The Little-Known Effect of 'Valentine's Day' Optimism May Boost Stock Prices
We believe seasonality and technicals are important and have written about the 'Santa Rally' and 'Sell in May' effects. It is a complement to our fundamental analysis. Our survey of retail investors shows that many take these indicators seriously. There is a “Valentine's Day” recovery effect driven by consumers' “romantic feeling” and optimism. With evidence the Delivers more than double the typical performance in the days leading up to February 14.
Valentine's Day Spending