Halloween (based on the pagan Celtic tradition of Samhain) is my wife’s favorite holiday. She has an artistic flair and Halloween provides her with a great opportunity to express herself in terms of pumpkin carving, home and yard decoration, and costume design. There is also the social component of meeting neighborhood families as they knock on your door for trick-or-treat.

A Very Profitable Holiday

Halloween is big business. The National Retail Federation predicts that Americans will spend $5.8 billion on Halloween activities in 2010. In fact, Halloween is the third most popular day to throw a party after New Year’s Eve and the Super Bowl. Look at the percentage of people that are expected to celebrate the holiday this Sunday:

Below is my list of top Halloween stocks that benefit from our culture’s infatuation with monsters, pumpkins, and candy:

1. Wal-Mart Stores (NYSE: WMT)

I didn’t want to include the world’s largest retailer in my list because it isn’t a pure-play, but unfortunately all of the specialty costume companies are privately-owned, including Party City, Spirit Halloween, Costume Cauldron, Halloween Thrills, and Halloween Adventure.

Nevertheless, Wal-Mart is a Halloween powerhouse with a wide assortment costumes and candy. Its supermarket subsidiary Asda is the largest Halloween retailer in Great Britain. And I was surprised to learn that Wal-Mart offers a wide assortment of caskets. Creepy.

2. The Hershey Company (NYSE: HSY)

The leader in U.S. chocolate sales with a 43% market share, Hershey is an obvious Halloween choice. Who doesn’t like Hershey bars and kisses, Reese’s peanut butter cups, Kit Kat (inside the U.S.), Krackel, Almond Joy, and Heath bars (especially in coffee ice cream)? I also enjoy Whoppers and Milk Duds when I go to the movies (yes I have a weight problem).

You’re out of luck if your favorite candy is Milky Way, 3 Musketeers, M&M’s, Snickers or Twix – they are all manufactured by privately-owned Mars.

3. Nestle (Other OTC: NSRGY.PK)

You probably think I’m including this Swiss-based company because of its candy products, which include Baby Ruth, 100 Grand (my absolute favorite), Butterfinger, Kit Kat (outside the U.S.), and the iconic Nestle Crunch.

But I’ve already covered chocolate, so that would be redundant. Instead, I’m including Nestle because it owns Libby’s Pumpkin. Pumpkin pie is awesome, as are chili, donuts, ice cream and baked beans made with pumpkin. Nestle has a pumpkin processing plant in Morton Illinois, which is known as the pumpkin capital of the world. Did you know that 46% of all pumpkins grown and a staggering 95% of all pumpkins processed in the U.S. are located in Illinois?

Honorable mention goes to Seneca Foods (NasdaqGM: SENEA) which also processes pumpkins in Illinois under the Festal brand. Its stock is down more than 13% today (Oct. 29^th) on disappointing earnings. Now that’s scary!

4. Liberty Starz Group (NasdaqGS: LSTZA)

Sorry Exorcist lovers, but the scariest movie of all time is the original Halloween from 1978. I remembering watching it with my sister and it was the only movie she ever walked out on. Michael Myers is one incredibly screwed up psychopath who has an uncanny ability not to die. I’ve never forgiven babysitter Laurie Strode (played by Jamie Lee Curtis) for stabbing Myers only once instead of multiple times. Did you know that Myers’ mask was based on a mutilated William Shatner mask? Star Trek will never be the same for me again.

Halloween was produced by Moustapha Akkad, a Syrian-American filmmaker who later was blown up with his daughter in 2005 by an Al-Qaeda suicide bomber in Jordan. Sad how real life can turn out to be even scarier than a horror film. Anyway, Akkad’s Halloween movie franchise is licensed to Anchor Bay Entertainment, which is owned by Liberty Starz. Anchor Bay also owns rights to George Romero’s Living Dead film series and the Evil Dead film triology.

Honorable mention goes to Lions Gate Entertainment (NYSE: LGF), which makes many current-day horror movies, including the Saw franchise, Drag Me to Hell, My Bloody Valentine, and The Descent.

5. Boston Beer (NYSE: SAM)

The maker of Samuel Adams beer (one of my favorites) makes a great tasting pumpkin ale. In fact, the Beer Advocate website rates its pumpkin ale 12^th-best in the world. As one of the reviewers writes:

Pours a beautiful deep mahogany color when held up to the light. Good clarity. Nice cream colored head with moderate head retention. Smells of pumpkin and spices. Very clean. Nice. Smooth with a nice balance between the pumpkin and spices. Not too much spice as to where it lingers on the palate like other pumpkin ales I’ve had. Medium slightly chewy mouthfeel with moderate carbonation.

One of the more drinkable pumpkin ales that I’ve had.

Bottoms Up!

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