Santa Claus Rally: 3 Companies Poised to Benefit from Holiday Shopping
"He's making a list and checking it twice. He's gonna find out who's naughty and nice. Santa Claus is coming to town."
As 2012 comes to a close, the holiday season is fast approaching, and with that, comes the proverbial "Santa Claus rally." While Washington may try to sap the market of having some holiday cheer before the books are closed on 2012, there are quite a few names that ought to benefit when Santa stuffs his presents under your tree.
Apple (AAPL) has been bruised and battered over the past few months like old fruit, but the tech titan from Cupertino, Calif. still has a lot to offer investors. The iPhone 5, iPad and iPad Mini are proving to be hits with consumers. Apple announced it had sold 5 million iPhone 5s its first weekend available in the U.S., and more than 2 million units its first weekend in China, its second largest market.
The iPad Mini, which offers consumers all the benefits of an Apple tablet at a smaller size and lower price, has done extremely well. In its first weekend available, Apple announced more than 3 million iPad Minis and fourth-generation iPads were sold. There are reports that due to incredibly strong demand, Apple is ordering another 2 million iPad Mini units for the holiday season.
In recent weeks, Apple has seen a sharp sell off, for a variety of reasons. Tax reasons, concerns over weakening demand and malaise towards Apple, but that hasn't stopped CEO Tim Cook from leading his company to gain nearly 29% this year.
Demand for Apple products continues to be exceptionally strong, and investors hopes are turning towards the television, where rumors continue to suggest Apple has something up its sleeve. With an average price target on Wall Street of $750 per share according to the 48 analysts polled by Thomson Reuters, Wall Street is betting on more upside for Apple in the coming months.
Facebook (FB), who started off as one of the hottest companies of 2012, went public, suffered incredible amounts of embarrassment, but has changed Wall Street's mind in recent months, as investors appear more bullish on the name.
The social network was able to beat Wall Street estimates in late October, showing promise with its mobile initiative, trying to monetize its more than 500 million users who use smartphones to access the site. Facebook generated 14% of its ad revenue from mobile devices during the quarter. It generated $1.26 billion in overall revenue during the quarter.
Since its earnings, Facebook has rewarded investors, tacking on more than 40%, as investors reassess the outlook for the Menlo Park, Calif.-based company. The exchanges have taken notice of its largesse as well, having been added to the Nasdaq 100 on Dec. 12, and rumors continue abound that the S&P 500 will add the company sometime in 2013.
Led by CEO Mark Zuckerberg, Facebook appears to be getting it right finally, listening to investors who want to see revenue growth from its 1 billion-plus users. New products such as Gifts, Nearby, and Sponsored Stories may lead to continued top-line growth for the social network. Investors are placing their bets they will.
Amazon (AMZN) has transformed the way we shop for goods and content, with seemingly no stop in sight. From electronics, to apparel, to sporting goods, Amazon has sunk its claws in a variety of segments, and consumers are responding, as are investors
Though investors are concerned over the weak gross margins (third-quarter operating margins came in at a negative 0.2%, and fell for a third straight quarter), shares are up 51% year-to-date, as top-line revenue continues to grow. Last quarter, Amazon's revenue grew nearly 30% year-over-year to $13.81 billion, as buyers stocked up on an assortment of goods.
The Seattle-based online retailer is expanding the channels in which in reaches you to in order to get you to buy things from it. Amazon has expanded its Kindle line up with new tablets, such as the Kindle Fire HD, and launched several new Kindle e-readers, including the Kindle Paperwhite.
Amazon is taking on all comers, from Netflix to Dick's Sporting Goods (DKS) to Best Buy (BBY). With seemingly an endless amount of areas to invest and grow in, Amazon shares look poised to move higher. It wouldn't surprise me if even Santa's done some of his shopping this year on Amazon.
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