best back to school stocks

Back to School Stock Picks

Back To School Economic Boost

Is back to school an important aspect of the current stock market forecast? Predictions are for a big return to school season and it’s going to lift the economy.

The National Retail Federation forecasts that total spending on back-to-school materials could reach a record of $37.1 billion up from $33.9 billion last year — an all-time high in their survey’s history.

We might not think spending for the K12 and college school population would have much effect on the national economy, but when you consider the size of the education system, sales to parents, child care, after school care, sports teams, tutors, transportation, teacher and education worker salaries, back to school can be a big helper for consumer spending and GDP. The spin off economic activity is immense.

Pent Up Demand Ready to Explode

You’ve got almost two years’ worth of pent-up needs,” notes Marshal Cohen, chief industry adviser at NPD Group. For school-age children, parents who held off on new clothes, backpacks or lunchboxes last year will find that they have to make those purchases this year. — report on Wall Street Journal.

On the stock market, there are companies that benefit from the back to school change this year, and you’ll find some of those inviting stocks listed below. See the 2022 stock market forecast and which stocks might excel in 2022.

Change in Employment Numbers Coming

And while employment has struggled for a year now, the start to the new school year will help with still high unemployed numbers and will reduce jobless claims. And a return to school suggests a larger theme of recovery and back to work for parents.

There were major concerns about the back to school event in 2020, with quite a few forecasts for a fragmented nation and huge surges in Covid 19. This year, 90% of teachers and workers are said to have been vaccinated, so with teachers ready to work and get paid, the school year will begin again.

Government Stimulus Adding Fuel to the Back to School Boom

In an unsubstantiated claim, the Biden government claims it has invested $130 billion to support the school re-openings including $122 billion through the American Rescue Plan’s Elementary and Secondary School Emergency Relief Fund. This includes monthly child tax credits of $250.

Given many parents are struggling financially during the pandemic, others have seen their financial situation stabilize with increased savings. This back to school season, they’ll be spending more as outlined below.

In hindsight, the negativity was uncalled for, however, schools did revert to stringent masking and social distancing on the K12 and college student segment. Virtual education may still be part of the national picture, but online learning has not received rave reviews. Kids need to be in class for instruction they remember, can apply, and for their social skills development.

For many parents, without funds for day care, the return of in class schooling is welcome, despite the threat of Covid 19. The delay in vaccines for kids is troubling as trials should have been completed by now. Vaccines or not, most US states and Canadian provinces are looking to send kids back to school.

This fall’s back to school season also comes with warnings, but the outlook is different. Kids still don’t fall ill to a dangerous level even with the more contagious Delta variant gaining ground, especially in the US. This season is expected to see kids returning to school in full force. Given parents haven’t purchased school supplies and clothing in over a year, kids have grown and will require everything from shoes, books, sportswear, clothing, outerwear and more as they head back to in person classes.

A Deloitte survey shows some interesting insights into parent’s attitudes and intentions for the 2021/2022 school year.

Their survey found that:

  • 55% are more confident about the economy
  • households are in better condition financially than 2020
  • 40% of parents expect to spend more on school items
  • overall spending will rise 16% to reach $32 billion
  • average spending for each child will reach $612
  • 31% expect to spend more on tech items and 44% spend less on traditional school items
  • 13% expect to spend more on electronic gadgets this year
  • 7% expect to shop more at dollar stores

The NRF forecasts that college students and their families could spend an average of $1,200 on college or university items, up $141 over last year. They expect total back-to-college spending will reach a record $71 billion, up from $67.7 billion in 2020.

Mode of learning in back to school season
Screenshot courtesy of kpmg.us.

Back to School spending on Technology.
Back to School spending on Technology. Screenshot courtesy of kpmg.us.
Retail stores focus of back to school spending.
Retail stores focus of back to school spending. Screenshot courtesy of kpmg.us.

Best Back to School Stocks

Comparing stocks to invest in? Review the overall stock market predictions first including 5G, Bitcoin, Tesla, Google and other possibilities.  Back to school stocks are generally large caps, retailers, and safer equities on longer price growth paths.  Look to these companies as the best back to school stocks:

  1. Kohl’s Corp. (KSS)
  2. Nordstrom (JWN)
  3. Ulta Beauty Inc. (ULTA)
  4. Dillards (DDS)
  5. Burlington Stores, Inc. (BURL)
  6. Levi Strauss (LEVI)
  7. Dick’s Sporting Goods (DKS)
  8. AT&T (T)
  9. Apple (APPL)
  10. Nike (NKE)
  11. DSW (DSW)
  12. Dollar Tree (DLTR)
  13. Walmart (WMT)
  14. Target (TGT)

Back to School is only 3 weeks away. Keep your investment eyes focused on the stock market outlook as the recovery continues and stimulus ensures no failure is possible.

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