’Tis the season when markets get… jolly? 🦃 It’s been a tough year for many, and this Thursday not every American will be tucking into a Thanksgiving turkey with all the trimmings. A year of interest rate hikes, and recession warnings have knocked the stuffing out of some companies, with the Forbes 2023 Layoff Tracker revealing an A-Z of US corporate layoffs - from Amazon (AMZN) and Dow Jones index newcomer Amgen (AMGN), to Zoom (ZM) and ZipRecruiter (ZIP). 

An estimated nearly half a million Americans hit picket lines in a year The Wall Street Journal called the ‘Year of the Strike’. That’s twice as many strikes as in our chaotic 2021, with more than 10 times as many US workers walking out on their jobs. 🪧

But through the rubble of a turbulent year where generative AI dominated the Nasdaq, there’s still plenty for US share market investors to be thankful for this Thanksgiving. So let’s pull the cracker on three of them. 🥳

1. Could Thanksgiving kickstart the Santa Clause rally? 

Investors may be hoping that history repeats. 🎅 Just as September’s average annual US stock market decline over nearly 100 years between 1928 and 2021 has been labelled the September Effect, some US share market observers and analysts’ data suggests that consumer and business optimism starts from Thanksgiving, historically sparking a Santa Claus Rally. 

Like other years, US sectors from energy, health care, consumer staples and discretionary spending, through to tech and a plummeting real estate sector hit the September skids. Even this year’s out of the gate surprise, AI chipmaker Nvidia (NVDA) fell around 9% in the month against a year where their stock has climbed more than 230% YTD. 

But perhaps ‘the optimists are in control’ and if history repeats, the potential for more buoyant consumer behaviour ahead may ignite share market optimism once again.

2. Investing gurus highlight 5 undervalued Thanksgiving stocks

Meet the underrated US food producers filling baskets. 🍗 Long term investing-focussed company GuruFocus looked into Thanksgiving stocks of the foods Americans are loading into shopping trolleys during the holiday season. They found five stocks popular with some ‘Investment Gurus’ that are considered undervalued by some long time investors:

• Despite American food behemoth Tyson Foods (TSN) laying off more poultry plant workers this October, according to GuruFocus data benchmarked against their GF value line, the US meat production giant stock is considered ‘significantly undervalued’ with ‘good outperformance potential’. Tyson Foods has a market cap of US$17.155 billion. Over one year their stock has fallen 28% and year-to-date (YTD) has dropped just under 27%.
• Legacy US company Kraft Heinz’ (KHC) stock is owned by a slew of high- profile investors, including Bill Gates and Warren Buffet - who owns a 26.51% stake. Kraft Heinz holds a current market cap of US$41.42 billion with their stock falling 13% over one year and down 20.7% YTD. According to GuruFocus value line, the Chicago headquartered company is ‘modestly undervalued’, and has a profitability rank of 7/10, where a higher score is more favourable.
• Fellow Chicago-based company, Kellanova (K), which is a split of if their business changed from Kellogg's this year, is considered ‘modestly undervalued’ according to GuruFocus data, but they noted ‘poor performance potential’. Kellanova holds a market cap of US$18.066 billion, and the company’s stock is down nearly 23% since November last year, and down 22.4% YTD.  
• Also rated as ‘modestly undervalued’ is US Cheerios and Betty Crocker food producers General Mills (GIS), which according to GuruFocus, while achieving a high rating for profitability, doesn’t rate well for performance going forward. General Mills holds a market cap of US$37.283 billion, with their stock down nearly 23% in one year and nearly 25% YTD.
• Retail food producer Hormel (HRL) known for their Jennie-O Thanksgiving turkey is rated ‘significantly undervalued’ according to GuruFocus data and has a profitability rank of 8/10. The company’s market cap is US$17.621 billion, and their stock has plummeted over one year, down nearly 35% and fallen 31% since January this year.

3. The predicted US recession didn’t come

The storm clouds didn’t roll in. ⛈️ In October last year, Bloomberg Economics, used probability models to predict with 100% certainty that the US would stumble headfirst into a recession in 2023. A year later, despite a litany of lending issues affecting the US financial and smaller tech sector - like the spectacular crash of Silicon Valley Bank, Signature Bank’s failure and First Republic’s notable near-miss - the US avoided recession. 

This is thanks in part to the nation’s economic resilience despite interest rate hikes, with the US economy up 4.9%, buoyed by household spending and having experienced no significant employment dip overall - with as many as 3 million more US job vacancies today than before the pandemic. Last month, The Fed also shared data showing Americans’ median net worth climbed an ‘historic’ 37% between 2019 to 2022. But concerns remain for young Americans who are clocking up record debt.

Fitch Ratings’ head of US regional economics Olu Sonola this month talking to Fortune, said of recession predictions:

‘It was a complete blowout that nobody would have predicted even three months ago. A tight labor market and a solid consumer balance sheet also mean the economy will be sustained for some time to come.’

While Thanksgiving is a US holiday, with summer ahead, we Kiwis also have plenty to be thankful for. 😎

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