Here at The Motley Fool, we prefer to invest in companies, not just trade stocks, and think about where a business might be headed five or 10 years down the road as opposed to how the next analyst upgrade or downgrade might affect a stock. However, that doesn't stop us from looking at smaller trends that can ultimately have a big impact on a company's future growth prospects.
In August of last year, $8.5 billion was spent at family clothing stores while an additional $2 billion was spent at bookstores, according to data from the U.S. Census. Marking the slow wind-down of the vacation season and the rush to get clothes, supplies, and gadgets needed for the upcoming school year, August and September, better known as the back-to-school shopping season, represents one of the many times of the year that retailers absolutely covet. That's why today I want to take a closer look at five companies that could benefit in a big way this back-to-school shopping season.
A portfolio "staple"
Some of the more obvious winners during the back-to-school season are companies that provide stationery supplies. Although you can pretty much pick up anything from paper and binders to pencils and pens at your local grocery store, I think office-supply chain Staples (NASDAQ:SPLS) might be a big destination of choice for back-to-school shoppers. Staples is in the perfect position to pick up back-to-school traffic with its main rivals OfficeMax and Office Depot merging. Their combination will result in store closures and displaced customers who could very easily find their way into Staples' stores. With a renewed focus on direct-to-consumer sales as well, look for Staples to be a pleasant surprise for investors.
Another obvious stop for back-to-school shoppers is the clothing store to pick up the latest fashions for the upcoming school year. Here I believe TJX (NYSE:TJX), the company behind T.J. Maxx, Marshalls, and HomeGoods, stands to be a big winner. With U.S. consumer spending in just OK shape and taxes for most Americans higher than where they were at this time last year, consumers are likely to shy away from the traditional mall stores and opt instead for brand-name merchandise at discount prices ... or, in other words, precisely what TJX specializes in. Even though the company's first-quarter comparable-store sales increase of 2% might appear tame, that figure compares with record results in the previous year. TJX has the right product and the management team to continue to succeed.
A healthy diet of "fruit"
Don't overlook the allure of technology during this back-to-school season, either. In addition to smartphones becoming a practical necessity for today's youth, tablets have become an integral learning tool for children from preschool through college. This is why I think investors should be considering Apple (NASDAQ:AAPL), which still dominates the tablet market with market share of 32% and sold a whopping 31.2 million iPhones just last quarter. Apple may have been slapped with the "boring" label in recent months, but this is the same innovative and cash-rich company we've watched transform our world over the last decade.
This company changed the game for everyone
Back-to-school season has become more than just what we buy; it's how we buy it! Two decades ago, retail transparency was nonexistent and we had but a few stores locally to choose from when we shopped. With the advent of the Internet and marketplaces such as Amazon.com (NASDAQ:AMZN), we now have the ability to shop thousands of items at once from the convenience of our homes, and often save a few dollars along the way. A study conducted by BIGresearch between 2006 and 2012 indicates that since 2006, the number of survey respondents who plan to shop online for back-to-school items has risen from 30.5% to 37.3%. Amazon could become a big beneficiary of that bump. With an enormous library and tech gadgets galore, parents need not even leave their house anymore to prepare their children for the upcoming school year.
Finally, when we've decided on what we want to buy for back-to-school, it comes time to pay for it. This is when I suspect most consumers will be reaching into their wallets and pulling out a credit card with a Visa (NYSE:V) logo on the front of it. With a whopping 40% of Visa's payment volume originating from the U.S. and consumers' paychecks being pressured by higher taxes, it seems only logical that many would turn to credit to finance their once-a-year purchases. Don't discount Visa's push into prepaid debit cards, either, which could be used with increasing frequency by parents to teach children how to properly spend and save money.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool owns shares of, and recommends, Amazon.com and Apple. It also owns shares of Staples and recommends Visa. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.