3 Unexpected Companies Profiting from Back-to-School
Elizabeth is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It’s no secret that back-to-school is the second most profitable time of the year, right after the Christmas season, for retail stores everywhere. Specialty clothing chains target high school and college students dressing up their closets with fall fashions; Amazon.com and other comparable superstore/online giants hit home runs by offering apparel, school supplies, books, and technology all in the same place; Apple capitalizes off the school rush with special discounts and promotions for tech-happy college students. But the rippling effects of back-to-school aren’t just limited to the obvious apparel, office supply, and tech retailers. Here’s a list of three surprising companies set to rake in the dough this fall.
1. Facebook (NASDAQ: FB): Back-to-school means hoards of new friends (cute-guys-down-your-hall and virtual Facebook personalities), thousands of campus events across the country, and millions of excited freshmen posting kitschy Instagram photos to the walls of anyone who’ll look. Because its business model depends heavily on advertising, more Facebook activity means more revenue- and improved figures for revenue and earnings will hopefully lead to a share price trading far above its current, near-lifetime low of $19.10, or 50% down from its IPO level. Facebook’s been investor enemy number one for quite some time, but this fall will mark its first back-to-school season as a public company; can Facebook step it up before the earnings report release on October 28? I doubt its share price will be back up to its IPO level for a long time, if ever- but I do believe it has the earning power, fueled by the upcoming seasonal stampede, to rise well above the $20 mark by the end of the quarter.
2. Starbucks (NASDAQ: SBUX): Despite record revenues of $3.3 billion for its third quarter, an increase of 13% from the previous three-month period, Starbucks still managed to disappoint investors with lower than expected earnings per share and a downgraded yearly outlook. The stock price promptly crashed more than 11%, its greatest single-day drop in more than 12 years. Now ringing in at $49.17, up from its three-month low of $43.16, Starbucks is still on super sale. With the beginning of a new school year and the flight of college students to cities across the country, Starbucks can get prepared to brew up a whole lot of coffee for caffeine-anxious twenty-somethings studying into the ungodly hours of the morning. With nearly 13,000 locations across the country, most students still have the opportunity to sip their espressos of choice during the summer- but come the fall, multiple Starbucks are suddenly in walking distance, sleeping hours are sliced in half, and parents aren’t there to chastise over the “outrageous” price of fair-trade coffee. I know I’m looking forward to my daily grande iced caramel macchiatos once I’m back to school next week.
3. Google (NASDAQ: GOOG): This one may seem obvious, but it’s scary how easy it can be to lose sight of the hailed tech giant in the early September swarm of advertisements from every retailer, office supply chain, and bookstore known to mankind. A revamped Google+ tailored to businesses and young professionals? A new and improved Google Doc system? Millions of students searching for everything from textbooks to academic articles to research materials to resume templates to winter internship opportunities to cats? While we’re at it, let’s not forget the massive impact of the upcoming presidential election in two short months and the ability of first-time, tech-savvy voters to learn anything they ever wanted to know about a candidate with the click of a mouse. Even priced at $688.01 with an enormous market capitalization of $225.0 billion, Google still has the potential for some serious growth if it capitalizes on the college start-up season and the 2012 race- a feat hardly any of us would doubt of Google.
If you’re thinking it’s too late to invest in the back-to-school rush, fear not! Trends show that students are choosing to purchase their school necessities gradually throughout the course of the fall, allowing time to cash in on sales promotions and predict changing fashions, rather than buying everything the day before classes begin. Happy investing!
LizPowers owns shares of Starbucks. The Motley Fool owns shares of Facebook, Google, and Starbucks. Motley Fool newsletter services recommend Facebook, Google, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.