Ah, Valentine’s Day. A day filled with chocolate hearts, romantic comedies, and dinners at your favorite special-occasion restaurants…
Or, as some see it, a corporate- and Hallmark-spun fraud of a day created with nothing but money in mind.
I tend to agree with the latter – but I don’t say it with the bitterness that you typically hear behind the words.
Instead, I say it with optimism and excitement. Because there’s an opportunity at hand…
This year, Valentine’s Day spending is expected to be 32% higher than last year, making for the highest sales number in history.
The record-breaking number will have retailers swimming in profit. And if you know how to play it, you’ll be enjoying some extra cash of your own.
Even if you’ve always been against tomorrow’s holiday, now you have a reason to celebrate.
Capitalize on the retail rush with these four Valentine’s trades…
Forget Chocolates – Celebrate This Valentine’s Day with Profits
The National Retail Federation (NRF) predicts record spending this Valentine’s Day. The average consumer will spend $196.31, up 21% over 2019. Total spending is expected to be a whopping $27.4 billion, up 32% from last year!
All of this spending spells one thing to me – profit opportunity. Let’s break it down…
The NRF goes on to categorize where this $27.4 billion will be spent. $5.8 billion will be spent on jewelry. $4.3 billion will be spent on a night on the town. $2.9 billion will be spent on clothing, and $4.7 billion on the combination of flowers and candy.
*Taken from the National Retail Federation (https://nrf.com/insights/holiday-and-seasonal-trends/valentines-day/valentines-day-data-center)
All of the items in the chart above could be classified as discretionary. That is, your spouse or loved one could certainly live without them. (Of course, that doesn’t mean these items are discretionary for you. Not buying a Valentine’s Day gift could be life threatening for some!)
There’s an easy way to profit on the anticipated record discretionary Valentine’s Day spending: The Consumer Discretionary Select Sector SPDR Fund (NYSE: XLY).
This exchange-traded fund (ETF) holds some of the largest discretionary retail companies in the market and includes companies like L Brands Inc. (NYSE: LB), Target Corp. (NYSE: TGT), and Booking Holdings Inc. (NASDAQ: BKNG).
Over the past four years, XLY has risen consistently an average of 10% the three weeks following Valentine’s Day. History, coupled with expected record spending this Valentine’s Day, makes the XLY a very high probability three-week trade.
The move here is simple. Buy XLY on Valentine’s Day, and sell it three weeks later.
If you want more, you could always play a leader within the consumer discretionary sector. This typically yields more profits than just playing the sector alone.
The following XLY stocks have compelling Valentine’s Day stats…
LB is a retail conglomerate that owns brands like Victoria’s Secret, Bath & Body Works, La Senza, and Henri Bendel. These are all big retailers for women’s apparel and luxury purchases.
The chocolate-covered strawberry on top of the cake? LB is one of the hottest stocks in the XLY.
Another leader is my favorite last-minute gift-buying store of all time, TGT. Over the last four years, TGT has risen 100% of the time the eight days following Valentine’s.
Lastly, let’s talk about cosmetics and skincare giant ULTA Beauty Inc. (NASDAQ: ULTA). The company is a huge Valentine’s Day bull runner with an average move of $25.50 the 22 days following Valentine’s Day over the past four years.
Buy and hold any of these stocks for a month or less after Valentine’s Day, and if history repeats, you just paid for this year’s Valentine’s Day gifts!
Happy Valentine’s Day, Power Profits Traders. Whether or not you like to celebrate the holiday, I hope it’s a day filled with profits.
Tomorrow, I’m going to show you yet another opportunity to make money – even when the market doesn’t make any sense at all.
America’s #1 Pattern Trader