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4 ETFs & Stocks for Meaty Returns in Thanksgiving Week

Sweta Killa

The Thanksgiving week is a feast for stock investors even with low volumes and a holiday-shortened week. And this year, Wall Street is riding high ahead of this major U.S. holiday. In fact, the S&P 500 breached the 3,100 level for the first time ever a week before while the Dow Jones topped the 28,000 milestone. Notably, tech stocks have been the biggest contributor to the market’s rally this year.

Per Schaeffer's Investment Research, the S&P 500 returned an average of 0.67% during Thanksgiving week over the past 50 years and the week is positive 70% of the time. The outperformance generally comes the day before Thanksgiving and the day after. The Wednesday before Thanksgiving has been positive 78% of the time, averaging a gain of 0.30% while the day after Thanksgiving has averaged 0.26% return over the past 50 years, being positive 70% of the time (read: Top-Ranked ETFs That Crushed the Market in a Month).

According to data from Bespoke Investment Group, the index has gained 0.64%, on average, during this holiday-shortened week since 1945. In fact, in 2017, the Thanksgiving week was even better with the index gaining 0.76%.

Given the historical trends, this Thanksgiving week is expected to shower gains. Additionally, trade deal optimism and cheap money flow will continue to drive the bulls this week. Added to the strength is a steadily improving economy with growing wages, increasing consumer confidence and rising spending (read: Sector ETFs to Win After Robust October Jobs Data).

Food, Beverage & Transportation: Hot Spots

While many corners of the stock world will see a rally, food and beverage, and transportation stocks will likely take charge. According to the latest data from the American Farm Bureau Federation, the average cost of serving 10 people for Thanksgiving is expected to increase a cent from last year to $48.91 (or under $5 bucks per person) after three years of decline since 2015. The shopping list includes a 16-pound turkey, stuffing, sweet potatoes, rolls and butter, green peas, fresh cranberries, a vegetable tray, a homemade pumpkin pie, whipped cream, and coffee with milk.

According to travel service provider American Automobile Association (AAA), Thanksgiving holiday travel will be the second highest, trailing the record set in 2005. More than 55 million Americans will travel 50 miles or more this Thanksgiving weekend (Nov 27-Dec 1), up 2.9% from last year. Of them, 49.3 million (up 2.8% from the last year) will go on road trips, 4.45 million (up 4.6%) will fly, and the remaining 1.49 million (up 1.4%) will travel by train, bus or cruise.

Notably, a report from the U.S. airlines group, Airlines for America (A4A), shows that a record 31.6 million (2.63 million per day) passengers will fly over the 12-day Thanksgiving holiday travel period (Nov 22-Dec 3), up 3.7% from last year. The busiest day will be Dec 1 with 3.1 million people traveling that day. The other busy days for air travel will be Nov 27 and Nov 22 when 2.98 million and 2.96 million passengers, respectively, are expected to fly (read: Transport ETFs, Stocks to Ride on Record Thanksgiving Travel).

As a result, investors seeking to cash in on the Thanksgiving week for big gains could consider the following ETFs & stocks. Thanksgiving celebration is mainly about eating and dining with families:

ETFs

While a few of these are Sell-rated ETFs, investors should note that these could get a boost this week on Thanksgiving excitement.

Direxion Daily S&P 500 Bull 3x Shares SPXL

This fund makes an excellent pick for investors seeking to make large profits from the soaring stock market in a very short span. The fund creates a triple leveraged long position in the S&P 500 Index while charging 95 bps in fees a year. It has $991.6 million in AUM and trades in heavy volume of 3.9 million shares, on average (read: S&P 500 Crosses 3,100: Profit From These ETFs).

Invesco Dynamic Food & Beverage ETF PBJ

This product offers exposure to 30 stocks that are engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index. With AUM of $70.3 million, the fund charges 63 bps in annual fees from investors and sees a light average daily volume of 7,000 shares. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

U.S. Global Jets ETF JETS

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 34 securities and charges 60 bps in annual fees. It has gathered $52.1 million in its asset base while sees moderate trading volume of nearly 24,000 shares a day. It has a Zacks ETF Rank #3 with a High risk outlook (read: Are Transportation ETFs Up for a Sweet November?).

iShares Dow Jones Transportation Average Fund IYT

The ETF follows the Dow Jones Transportation Average Index and offers exposure to the broad transportation sector. The fund holds a small basket of 20 stocks with railroads, air freight & logistics, and airlines taking the top three spots. The fund has accumulated $513.6 million in its asset base while sees a good trading volume of around 215,000 shares a day. It charges 42 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

Stocks

While there are several stocks in the food, beverage and transportation spaces that could spike on Thanksgiving, we have outlined a few that have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, a VGM Score of B or better, and a positive earnings estimate revision for the holiday quarter over the past one month.

The Kraft Heinz Company KHC

This is one of the largest consumer packaged food and beverage companies in North America. The stock saw solid earnings estimate of 7 cents for the current quarter in a month. It has a Zacks Rank #3 and VGM Score of A.

Allegiant Travel Company ALGT

This carrier operates a low-cost passenger airline and focuses on linking leisure travelers in small and medium-sized cities to world-class leisure destinations. It has seen solid positive earnings estimate revision of a penny over the past 30 days for the holiday quarter. The stock has a Zacks Rank #1 and VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Brinker International Inc. EAT

It primarily owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. The stock has seen earnings estimates rising a couple of cents over the past month for the holiday quarter and carries a Zacks Rank #2. It has a VGM Score of A.

Southwest Airlines Co. LUV

This is a passenger airline that provides scheduled air transportation in the United States and 10 near-international markets. It saw earnings estimates rising 3 cents in a month for the holiday quarter. The stock has a Zacks Rank #3 and VGM Score of A (see: all the Industrials ETFs here).

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