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Memorial Day Trading: what you need to know

27 May 2021 | by: Kirsteen Mackay

Memorial Day Trading: what you need to know

Memorial Day is approaching. It takes place on the last Monday of May in the United States. It’s an American holiday, honouring the men and women who died while serving in the US military. This year Memorial Day takes place Monday, May 31, 2021.

On holidays such as this, the financial markets are closed. That means no trading activity can take place on the New York Stock Exchange (NYSE) or the NASDAQ. So, the last time you can trade in the stock markets is 4pm on Friday, May 28. Meanwhile, the bond markets close early that day, at 2pm.

The financial markets reopen as usual at 9:30 am on Tuesday, June 1.

Summer stocks

This day marks the unofficial start of summer. So, which shares look like good summer stock picks?

Jim Cramer is an advocate for using Memorial Day as an opportunity to trade summer stocks. His thinking is that certain summer-themed stocks go up in value after Memorial Day, so buying them before and selling them in the fortnight after can net you big gains.

On Mad Money Cramer recently said:

“If you buy these summertime stocks the trading day before Memorial Day weekend, which is in three weeks, and then sell them one to 15 days later, you tend to make a bundle,”

Nevertheless, he also said he thinks each of the stocks mentioned also warrant a longer-term investment horizon.

These stocks included General Motors (NYSE: GM), Newell Brands (NASDAQ: NWL), Tesla (NASDAQ: TSLA), Visa (NYSE: V) and Camping World Holdings (NYSE: CWH).

Visa

As one of the world’s biggest payment processors, Visa is a heavyweight stock with a $477bn market cap. Visa is less exposed to interest-rate risk than banks and has a global presence. It’s therefore a popular long-term investment.

In its recent Q2 results earnings per share came in at $1.38, beating analyst expectations. It also great its services revenue by 8% and data processing revenue by 11%. Its international transaction revenue fell 19% due to the pandemic restrictions.

The company also recently heightened its appeal to crypto fans and retail investors. That’s because it’s ventured into the world of cryptocurrencies by agreeing to settle transactions in digital dollar stablecoin USDC. This is a wise move as the blockchain technology underpinning much of the crypto network actually presents a credible threat to the future of Visa and Mastercard.

Visa currently has a large moat due to the huge network extending from its presence. This means it has strong earning power. But this also means its share price commands a premium.

Visa has a forward price-to-earnings ratio (P/E) of 35. Its earnings per share are $4.88 and its dividend yield is 0.5%. Visa is currently trading at $222 a share.

One risk to the Visa share price is that The U.S. Department of Justice plans to open an investigation into Visa’s US debit practices.

It also faces the likelihood of billion-dollar fines after the UK Supreme Court found it limited competitors when charging its default “multilateral interchange fees” to retailers. Mastercard is in the same boat.

Camping World Holdings

Camping World CEO Marcus Lemonis is a high-profile businessman with a history in politics and television. He starred in CNBC’s most popular reality television show, The Profit, which gained him notoriety. He’s disliked by some and revered by others.

Nevertheless, he’s heavily invested in Camping World and has a good track record when it comes to business.

Camping World $CWH
Photographer: Alessandro Ranica | Source: Unsplash

Camping World is America’s largest retailer of RVs. It also sells anything you could possibly think of that relates to camping and enjoying the great outdoors.

The Camping World share price has steadily climbed 136% in the past year. And this week declared a quarterly cash dividend of $0.25 per share.

Of course, all shares carry risks and Camping World is no different. The risks to this stock include rising fuel prices which may put people off taking RV vacations and the ongoing battle against Covid-19. But on the other side, fear of the virus may encourage people to camp rather than venture too far afield or to places that may lead to them inadvertently contracting the virus.

So, if you’re thinking of making summer stock trades in time for Memorial Day, be sure to get in before close of play Friday 28.

Valuethemarkets.com, Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

  • Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.
  • Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

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