The holiday season is almost upon us. It’s that magical time between Thanksgiving and New Year’s filled with good food, family, friends and gifts. However, it’s not just everybody’s mood that is affected during this period, but also the financial markets. This is the season for the ‘Santa Claus Rally’.
The term, Santa Claus Rally, was coined by Yale Hirsh in 1972. He was also the creator of the “Stock Trader’s Almanac.” It refers to the last 5 trading days of the year and the first 2 trading days of the new year. On average, a 1.3% gain has been observed in the S&P500 since the 1950s during this period.
Human psychology, market madness and many other factors make this time a little different from the rest of the year. Which means you might want to pay a little closer attention to your trading strategy during this period. And this has not been your usual year. Let’s take a look at some of the stock CFDs that are typically affected during this holiday season.
Which Stock CFDs to Trade This Holiday Season?
You might be forgiven for a lack of discipline with the mince pies, but not with your trading. Here’s a look at some promising stock CFDs you could consider:
Despite the risks associated with the pandemic, the world’s largest retailer remains optimistic about its December projections. In the third quarter, the adjusted profit growth for Walmart stood at a whopping 16%. This showed that the retail industry was going strong even during the pandemic.
A major reason behind this is Walmart’s online store. Walmart’s digital sales in Q3 grew 79%, in comparison to Q2. This followed an amazing 97% increase in Q2 and a 74% increase in Q1 before that. Even when customers could not step out of their homes, they didn’t lose their loyalty for Walmart. They merely shifted online. Sales are only expected to increase with all the holiday shopping.
Walmart has already prepared itself for increasing sales volume during the holiday season. Around 2,000 of its stores have been converted into digital fulfillment hubs. These can also be scaled up, if required.
Another stock that could see a good holiday season is Visa. Over the past 10 years, the world’s largest payment processor has been providing annualised returns of around 28%. Such strong performance is expected in December as well.
With the pandemic continuing, Visa’s cashless technologies can be a great asset for the company. Plus, Visa has made some interesting deals and investments as well. In October, the company announced that it would be rolling out its Tap to Pay contactless payment app in 15 countries. This app would allow consumers to complete transactions by simply tapping on a merchant’s Android smartphone or tablet.
The year has been defined by COVID-19. Pfizer was among the first companies to announce a successful vaccine for the coronavirus. They have also submitted a request to the US FDA for Emergency Use Authorisation (EUA) for their vaccine. It is expected to be approved and ready for use by mid to end December, especially for high risk areas in the United States. By the end of 2020, 40 million doses of the vaccine are expected to have been distributed. On the back of the vaccine, Pfizer could see support for its stock in December.
AstraZeneca is another pharmaceutical giant that could bring good news regarding a vaccine this holiday season. In partnership with the University of Oxford, AstraZeneca claims to have developed a vaccine that is 70% effective. Although the effectiveness of this vaccine is lower than that of Pfizer (95%), it is expected to be used widely.
The first reason for this is the manner of measuring the effectiveness. The Oxford vaccine takes into account cases of all levels of severity, hence the lower effectiveness. It is also a more practical solution compared to other vaccines as it can be refrigerated easily. In addition, AZN has said that it would sell the vaccine at cost price. These reasons indicate that the AZN stock is expected to rise in the coming months.
Tesla has surpassed expectations in 2020. In November 2019, the automobile company had posted net losses of $907 million for the first 9 months. In 2020, Tesla has generated revenue $7.8 billion by the end of Q3. The company is expected to perform even stronger in the coming weeks.
In October, Tesla announced a price cut for its highly popular Model S. The luxury model is expected to cost almost 7.5% less, coming down from $74,990 to $69,420. It also announced the rollout of a new driving mode, which has been billed as fully autonomous. This has also increased the hype around the stock.
Lastly, the election of Joe Biden is expected to increase focus on greener technologies in the US. This is also expected to work favourably for Tesla’s electric vehicles.
Mastercard plunged in the early days of the pandemic. But since then, it has witnessed a strong comeback. Although cross-border transactions are still extremely low, digital payments have been picking up during the pandemic. In fact, excluding cross border payments, Mastercard reported YOY growth in gross transaction volumes in Q3. During this period, the volume of switched transactions also increased 5%.
Additionally, Mastercard is developing a new payment method. This will be an account-to-account transfer service. It will facilitate quicker transactions between businesses. These factors could help Mastercard report improving profits, which could fuel stock performance.
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Which stock CFDs would you trade this holiday season? Tweet us at @Derivdotcom and share your experiences.
The contents of this article do not constitute trading advice and should be treated as general information only.
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