Credit Card “DECLINED” Notice — And 3 Stocks So It Never Happens Again
“Sorry, your card was declined.”
I was at the hospital cafeteria picking up some food for my little man who broke his arm this weekend. And for some reason my card wouldn’t go through. Was I really out of money?
The holidays can be stressful trying to make sure you cross everyone off on your shopping list. And then if you throw in some unexpected expenses like a trip to the emergency room, the stress can affect your finances!
Thankfully in my case, I just used the wrong pin for my debit card. But the experience made me think about how many families are spending money on holiday shopping this season.
More importantly, I started thinking about how you as an investor can protect your wealth and start cashing in on this year’s holiday spending.
Today, I want to show you three reasons why holiday shopping should be stronger than ever this year. And then we’ll take a look at three different ways to play this profitable trend.
So let’s get started!
Consumers Have More Reasons to Spend
Over the past year, we’ve talked a lot about the American “wealth effect.” Thanks to a strong job market, people have more money to spend, driving retail sales higher.
But in addition to that ongoing force, there are three additional reasons why shopping should be especially strong this year.
The first is tied to another trend we’ve been watching: the decline in oil prices.
Extra supplies of oil have been hitting the market driving oil prices lower. This means gasoline prices have also been dropping. And with less money being spent at the pump, consumers have more money left from every single paycheck. That money will come in handy when it’s time to buy those last minute holiday gifts!
A second reason shopping should pick up is low credit card debt.
Heading into the holiday season, consumers have been carrying lower credit card balances. That’s a smart financial move to keep from paying those awful credit card interest rates.
But knowing human nature, many shoppers will opt to spend more during this season, even if it means taking advantage of those credit limits. With more room to spend money on credit, we can expect to see higher holiday sales this year.
One final reason shopping should pick up this year is thanks to less inflation.
Inflation levels have been low over the past several years. And for us as shoppers, that means our money will go farther. I don’t know about you, but if I can still buy great gifts without paying unreasonable prices, I’ll definitely be in more of a buying mood.
Add these three drivers together, and it’s clear that this is going to be a season with plenty of spending here in the U.S.
But how do we take advantage of all of this spending?
I’m glad you asked!
Three Areas for Investors to Cash in on Spending
An obvious answer to how we profit from higher spending is by owning retail stocks.
But in today’s volatile market, you have to be very discerning with what you buy. After all, while retailers have reported strong revenues, some retail stocks have been moving lower alongside the broad market.
That gives us a chance to buy at a discount. But you’ll want to make sure you’re buying shares of companies poised to do very well this year.
Here are some great areas to start shopping for investment opportunities.
Maybe I’m biased because I have three teenage daughters. But I’ve been watching athletic apparel companies very closely this year. Stocks like Under Armour (UAA), Lululemon Athletica (LULU) and Columbia Sportswear (COLM) should be in great shape to move higher as sales beat expectations and investors jump in.
In some cases (like with LULU), the market pullback has given you a great opportunity to buy stocks that are growing, while paying a discount price. (Who doesn’t like a discount during the holidays!)
A second retail area to keep tabs on is the restaurant industry. Some of my favorite memories with my family have taken place going out to eat together. And with the culture in America getting busier — coupled with extra money to spend — it’s natural for more families to go out to eat.
A few attractive stocks in this area include Chipotle Mexican Grill (CMG), Cracker Barrel (CBRL) and Brinker International (EAT). When you hear Chipotle, you might think about the E. coli issues that they’ve had in the past. But the company has made headway in preventing issues like this from coming up again. And Chipotle’s commitment to fresh organic food should attract more socially conscious diners over time.
A final retail area to keep tabs on is the discount retail category. I’m talking about big stores that offer great deals like Walmart Stores (WMT), BJ’s Wholesale Club (BJ) and Costco (COST).
Even though consumers have more money to spend, there are still many shoppers (myself included) who want to make every dollar stretch. Stores that are famous for offering good products at discount prices will continue to grow revenue this holiday season.
And heck, you can probably make a profit from Costco based solely on the fact that I shop for our family of 9 there every week!
So there you have it… Three ways to profit from higher holiday spending in 2018.
I hope you’re enjoying this holiday season and remembering that while building our wealth is important, cash is only a tool to help us have more of an ability to focus on the things that really matter — like friends, family, and helping those that are less fortunate than ourselves.
Here’s to growing and protecting your wealth!