It's Wedding Season – 4 Companies that Benefit from Nuptials
Andrew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Every year in the Spring, animals awake from their winter slumber, vegetation once again turns green and lush, and weddings are held by the millions. From drive through chapels in Sin City, to gothic cathedrals with hundreds of guests, no two weddings are the exact same. However, what all weddings do share is money. The wedding industry is a huge business and is only getting bigger. Basic cable television shows such as My Fair Wedding and Four Weddings have exploded in popularity as many brides-to-be tune in to for ideas and to judge (come on, you know you all do it). For those of us who would rather make money than spend ungodly amounts of money, there are several companies that provide perfect opportunities to capitalize on this booming market.
In 2011 alone, the wedding industry as a whole made over $48 billion dollars in revenue. Much of this revenue is attributed to the primary wedding activities such as clothing, venue, food, entertainment, etc. There is a portion of this that comes from the retail purchase of gifts for the new couple by the wedding attendees. Parent company of the leading wedding website, TheKnot.com, XOXO Group (NYSE: XOXO) released a study they had completed last year about wedding couples and their choices for gift registries. In their findings, they noted that each and every year, 1.5 million couples are registered for wedding gifts. Of those that are registered, 54% of the gifts received come from these registries. The remaining percentage of gifts usually comes in the form of cash, which can be used to complete the registry (often at a discount for un-purchased items). Below is a list of where couples are setting up gift registries, and why they can benefit investors.
Bed Bath and Beyond (NASDAQ: BBBY) – is the number one choice amongst engaged couples to set up their registry, with over 60% of all XOXO survey responders stating that they had registered with BBBY. With the US economy slumping, especially in the retail environment, over the past couple of years BBBY has consistently outperformed the market and analyst expectations. Over the past 12 quarters, BBBY has on average beat analyst quarterly estimates by an average of .10 a share, and posted no negative earnings. BBBY is up 31.71% over the past 52 weeks, compared to 4.84% of the S&P500. The future is equally as bright as BBBY’s past performance; with a forward P/E of 14.07 there are no signs showing that the honeymoon is over for BBBY.
Target (NYSE: TGT) – Target ranked second on the XOXO survey for wedding registries, with 51% of respondents claiming to have created a registry with this big box giant. Target is experiencing tremendous growth. With over 1,750 current stores in 49 states and the District of Columbia, Target is focusing on opening several additional stores in the United States as well as Canada. Even in the hard economic times of 2008 and 2009, Target opened almost 200 new retail facilities. Much like BBBY, Target has a good forward outlook with a forward P/E of 11.91 and an increase of their current market share of 14.4% to over 17% market share by 2016.
Macy’s (NYSE: M) – Macy’s ranked third in the XOXO survey with 39% of respondents stating they were registered at Macy’s. Part of the drop off from number two Target to Macy’s can be attributed to Macy’s operating less stores, and controlling less of the department store market share which they compete for with likes of Target. Currently, Macy’s operates about 850 stores in 45 states. However, Macy’s is no stranger to the wedding business. Prior to 2007, Macy’s operated the popular bridal store David’s Bridal. These 250 stores were sold off by Macy’s in 2007 to Leonard Green and Partners, a private equity firm, for $270 million. This sell off was strategically important for Macy’s as the Great Recession impacted Macy’s greater than Target or BBBY. Since 2010, Macy’s has managed to dramatically turn their business around. Over the past nine quarters, Macy’s has consistently beat analyst estimates by .07 a share, without having any negative earnings. With a whopping 63.55% share increase over the past 52 weeks, Macy’s has posted some impressive gains, and a forward P/E of 10.56 indicates they might not be slowing down yet.
Kohl’s (NYSE: KSS) – Kohl’s ranked 4th on the XOXO survey with 11% of all respondents stating they were registered at this retailer. Kohl’s is probably the weakest option among these wedding bell stocks. Kohl’s stock price has decreased to the tune of 7.16% over the past 52 weeks, where it currently sits within 20% of its 52 week low. Both revenue growth and earnings growth have been negative 0.30% and -7.70% YOY respectively. Yet, that being said, Kohl’s still shows some promise. Their forward P/E is the lowest between any of the aforementioned companies, at 9.39 and it has a low price to sales to boot, at .65. A majority of Kohl’s analysts rate KSS as a buy or strong buy based on positive earnings expectations as well as a strong forward dividend yield of 2.5%, an increase of .4%.
Whether you are looking for an espresso machine, cutlery knife, dividend or capital gain, these four stocks provide excellent opportunities for those from all walks of life. Regardless of if you are getting married, attending a wedding, or looking for a great investment, wedding season offers something for everybody. Happy wedding season.
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