3 Festive Stock Picks

VIDEO: Killik & Co's Rachel Winter looks at three stocks to put into Christmas stockings, which are set to benefit from festive spending 

Holly Black 17 December, 2019 | 11:13AM
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Holly Black: Welcome to the Morningstar series "3 Stock Picks." I'm Holly Black. With me is Rachel Winter. She is Investment Director at Killik & Co. Hello.

Rachel Winter: Hello, good morning.

Black: So, investment picks for Christmas. Possibly investment and Christmas, not two things that usually go hand in hand. But I think it can actually be a quirky gift or maybe a way to get children interested in investing for the first time.

Winter: I think so too. So, let's try and pick some stocks that probably are relevant to Christmas, perhaps companies that will be exposed to the buying of Christmas presents. So, first up, let's have a look at Disney. Again, it's a company we've probably mentioned a few times, a brand we all know and probably a brand that we all love, but I think it's a brand that's very relevant to Christmas because I always used to get a Disney DVD or probably a Disney video back in the day when I was young, probably a Disney Betamax. But now, we're all streaming Disney. But I think looking at the results from Frozen 2, which came out last weekend, broken a number of box office records. I think that really shows that Disney is still a very relevant brand. And I'm sure huge numbers of parents will be flocking to the Disney store to buy this new Frozen 2 memorabilia for their children.

Black: Or they could buy a share and children can get excited tracking the progress of that share over the years to come?

Winter: They could try that. Hopefully it would work. Hopefully we can teach your kids about investing.

Black: Or it could be a really disappointing Christmas morning. What's our second festive stock?

Winter: Second one, I think Estée Lauder. So, Estée Lauder, one of the hugest cosmetics companies in the world. And it does own Jo Malone. So, I think Jo Malone is a classic company for Christmas gifts, huge exposure to the candles and diffuser markets. And I think that is something that people do very commonly by either as gifts at Christmas or just to send that home at Christmas time. So, I'm a big fan of their sort of winter scented Christmas diffusers and candles. So, I would expect Jo Malone to do incredibly well around about the Christmas time.

Black: It's one of those examples of a company that's got the intangible assets that make it hard to compete with. You can put out candles whichever company you are, but Jo Malone has got this sort of prestige about it.

Winter: They have. It's just seen as a quality candle. People know the brands. I think they feel quite proud of having a Jo Malone candle in the home. And despite the fact that probably more than £60 each, they are very expensive and yet people do buy them in huge quantities and they're doing incredibly well at the moment.

Black: Not sure if these are stock tips or if you are just putting your Christmas list out.

Winter: Yeah, present tips, stocking filler the tips.

Black: Okay, our final present tip then?

Winter: The final one is TJX which is the company that owns TK Maxx. This is what's called an off-price retailer. So, we've got thousands of TJX stores in the US, thousands of TK Maxx stores in the UK And these stores picking up excess stocks from other retailers and selling it on to consumers. And they're actually doing incredibly well because they just take up their excess stock that other retailers have made, and they sell it on fairly cheap prices and still manage to make a profit. I think consumers really enjoy that kind of treasure hunting feel that you get when you do go to TK Maxx, because you just never quite know what you're going to find. They're doing incredibly well. They're launching hundreds of new stores. And I think it is one of those places where you do go enough for Christmas presents, again, because you're just never quite sure what little gems you're going to find in these stores.

Black: Oh, I'm such a fan. But is this – I mean, obviously, the travails of the high street are pretty well known. Is that bucking the trend?

Winter: It does really seem to be. So, their growth has been incredible. I think, because they can pick up stock quite cheaply, they don't sell a lot online. So, I think people really feel that they have to go to the store in order to pick up those bargains. People do continue to go to the stores. And I think the fact that people feel like they're getting really good deals is all part of the fun. I think people really do enjoy that treasure hunting aspect of the TJ Maxx stores.

Black: Well, thank you so much for your time.

Winter: You're welcome. And have a good Christmas.

Black: And Merry Christmas.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Holly Black  is Senior Editor, Morningstar.co.uk