Treat Your Portfolio With These 3 Spooky Season Stocks

Spooky season is big business in the retail world, even as consumers trim their spending overall amid persistent inflation and other concerns.

The National Retail Federation estimates Halloween spending will increase by 13% year-over-year (YOY) to more than $13 billion this year, with customers adding costumes, decorations, candy, and more to their carts in anticipation. Investors might see this as an opportunity to focus on some retailers specializing in holiday goods, all of whom could get a boost thanks to the much-needed influx of customer dollars.

While it's difficult to predict exactly how consumers may divide up their spending in advance of Halloween, it's a good bet that some of the biggest retailers in the space—companies like Walmart Inc. (NYSE: WMT), Hasbro Inc. (NASDAQ: HAS), and Tootsie Roll Industries Inc. (NYSE: TR)—will get a share of that additional spend. Here's a closer look at each and why it may be a time to consider investing.

Walmart: Growth Opportunities Despite Valuation Concern

$822-billion retail giant Walmart is likely to be many families' go-to store for Halloween needs this year. A popular choice among investors concerned about a recession, Walmart's resilience makes it a good bet even though it has a high forward price-to-earnins (P/E) ratio of 40.4.

The stock has performed well this year, outpacing the market just slightly to return nearly 15% year-to-date (YTD), and analysts expect earnings growth to continue to be robust with more than 18% improvement. On top of that, Walmart's 0.91% dividend yield provides an added passive income bonus.

Despite its size and already-dominant market position, Walmart has multiple avenues for further growth. Its e-commerce business continues to soar, surging by 25% YOY for the latest quarter. Advertising and membership income are other major growth areas, and the company's international expansion and wellness offerings also provide an opportunity.

On the other hand, investors may shy away from Walmart's high valuation and its exposure to tariff risks, as well as uncertainty about the role of AI in the company and potential competitor advantages with the developing technology.

All that said, analysts are still broadly bullish on WMT shares. All but one of the 31 analysts rating WMT stock call it a Buy, and despite the recent gains Wall Street still sees 9% in upside potential in the near future.

Hasbro: Digital Gaming and Cards Lead Rapid Gains

Toy and games maker Hasbro is just over 100 years old, but still has room to grow, according to analysts, who are projecting more than 15% in earnings improvement in the coming year.

With impressive earnings and revenue beats for the second quarter of the year, the company has experienced strong growth in categories including digital gaming and its Wizards of the Coast segment. The latter of those operations, responsible for the popular Magic: The Gathering card game, experienced a 23% YOY revenue surge in the last quarter and should continue to see strong growth through the end of the year.

Consumer products—those most closely linked to Halloween—saw a 16% decline in sales for the second quarter. While Hasbro expects this segment to have an overall 5-8% decline for the full year, the month of October could be a relatively bright spot. But investors should keep in mind that concerns remain about tariff-related negative impacts.

Overall, however, analysts see Hasbro as being a Moderate Buy, based on 10 Buys out of 12 total ratings. Though shares have climbed an impressive 32% already this year, analysts also predict more than 17% in possible upside.

Tootsie Roll: Legacy Candy Maker Sports a Strong Dividend

It wouldn't be Halloween without candy, and legacy confectioner Tootsie Roll is a go-to provider. With its strong product lineup like Tootsie Pops, Dots, and Charleston Chew, the company remains a dominant name in the seasonal candy aisle.

To be sure, the company operates within a narrow niche. And with a P/E ratio of 34.5 and a P/S ratio of 4.4, it is not likely to be considered undervalued. Economic headwinds have slowed growth, but Tootsie Roll has managed to bounce back after the pandemic: EPS improved by 14% YOY for the latest quarter on 3% sales growth.

One of the biggest draws of Tootsie Roll, however, is its dividend. The company has a long history of dividend payments, a fairly compelling yield of 0.84%, and a solid payout ratio under 29% thanks to its healthy cash flow. The company also maintains a conservative balance sheet, providing flexibility for navigating future supply chain or cost challenges.

While the stock’s P/E of 34.5 and P/S of 4.4 make it look expensive relative to peers, its seasonality-driven sales bump, particularly in Q4, could provide a short-term lift to both revenue and sentiment.

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The article "Treat Your Portfolio With These 3 Spooky Season Stocks" first appeared on MarketBeat.