Hopefully you remembered to buy flowers, chocolates, cards and other gifts earlier this week. As you probably know, it was Valentine’s Day. If not, you can’t blame the companies that make and sell Valentine’s Day gifts. They certainly did their best to remind you with advertisements … and all those ads seem to have a delayed effect for at least one company’s stock.
You might think the time to trade Valentine’s Day is before the holiday. There are some great trades based on that idea, but it’s not too late to make a literal “flowers and chocolate” trade.
1-800-Flowers.Com Inc. (Nasdaq: FLWS) is a company that seems tailor-made for the holiday. FLWS reported $1.2 billion in sales over the past 12 months, but flowers represent less than half of that amount. The company also operates a gourmet food and gift baskets division, which accounted for about 55% of sales in the past 12 months.
That division will put anything in a gift basket, from freshly made cakes to chocolate-dipped strawberries to Tootsie Rolls and Chex Mix. This might seem like the perfect stock to trade for Valentine’s Day, but it seems that all those ads in February result in sales later in the year.
Historically, the company has made just as much money next quarter when Mother’s Day gifts are needed. FLWS’s biggest quarter is the Christmas holiday season. That means it’s a great after-Valentine’s Day trade.
Seasonal trends can be plotted on a chart, and you can see below that FLWS tends to make a low at the end of February.
Seasonal trends are a form of an average of past price action. They shouldn’t be the only reason you take a trade, but they can be one factor in a trading decision. FLWS has delivered a gain in March 88% of the time since the stock began trading in 1999.
If you remembered Valentine’s Day, FLWS may be a trade that helps pay the credit card bill for those overpriced roses and chocolates.
Michael Carr, CMT