Happy holiday means big things for economy in 2015

The U.S. consumer ditched those nagging cheapskate ways this holiday season, and that could mean big things for the economy in 2015.

Whether it was a $5,000 curved, LED television at Best Buy or some extra food tossed in a blue Walmart basket for Christmas Day dinner, the U.S. consumer spent much more freely this holiday season than at any November/December stretch since 2009. In fact, in many instances at Macy's and JCPenney post-Christmas, racks and shelves looked as if they were ravaged by packs of wolves from the movie "Twilight."

The stock market snuffed out months ago sneaky strong spending on the part of consumers that are saving on dinosaur fuel and have a degree of confidence they won't be handed pink slips in January.

The malls came alive this holiday season, and that is a good sign on the economy for 2015.
Brian Sozzi
The malls came alive this holiday season, and that is a good sign on the economy for 2015.

Since October 1:

  • Dow Jones Industrial Average: +7.4%
  • S&P 500: +7.3%
  • Nasdaq: +8.7%
  • Walmart: +14.2%
  • Target: +20.9%
  • Apple: +14.9%
  • Best Buy: +19.9%

Here is what the rebound of the U.S. consumer means for the economy in 2015:

Apple Watch: Whenever the Apple Watch and its zillions of accessories hit the market in early 2015, consumers frantically buying the pricey iPhone 6 and 6+ this holiday season bodes well for a non-essential product starting at $349. That appetite to wear an iPad mini on one's wrist could equate to rising sales and earnings projections by Wall Street on Apple, and a stock that not only climbs higher as a result, but lifts the broader market given the tech giant's index weightings. Happy Apple shareholders that so happen to use their largest holding's products, could positively influence online cash registers at the likes of Macy's Bloomingdales division and of course, Amazon.

Also don't rule out the possibility for a game-changing new product (or, finally, Beats by Dre retail stores) from Beats by Dre next year that is met with robust consumer enthusiasm and additional estimate raises by analysts. Holiday season 2014 was where the expensive Beats by Dre brand reached Main Street due to modest discounts at Apple stores, Walmart and Target. In effect, via its light discounting Apple has just created a new upgrade cycle for the Beats by Dre brand. Sound familiar?

Semiconductors: All of the love being tossed the direction of Apple products, and non-Apple products, by emboldened consumers will benefit semiconductors like Broadcom, Qualcomm and SanDisk. It may already be taking hold. In early December, trade group SEMI raised its 2015 outlook for semiconductor demand. Even Microchip Technology, which issued a warning in October of an industry slowdown that rocked markets, is experiencing improving trends.

"We are now even more confident that the small correction that we experienced in the September quarter is behind us," said Microchip Technology CEO Steve Sanghi on Dec. 2. The iShares PHLX SOX Semiconductor Sector has gained 7.6 percent in the past three-months vs. a 6.7-percent increase for the Nasdaq Composite.

Very picked over racks at department stores post Christmas harkens back to the strong spending of 2005-2007.
Brian Sozzi
Very picked over racks at department stores post Christmas harkens back to the strong spending of 2005-2007.

Homebuilding suppliers: Strong demand for big-ticket merchandise during the holiday season hints at many U.S. households being open to once again incurring debt to live a different lifestyle. That is good news for higher-end homebuilders Toll Brothers and Lennar, and the names that are equally exposed to their fortunes such as Whirlpool, Owens Corning, Sherwin Williams and PPG Industries. Coupled with solid ordering activity in semiconductors, demand for building products could provide a nice jolt to the investment component of the GDP calculation in the front portion of 2015.

Suddenly, the November employment report doesn't appear to be a fluke, huh?

Railroads and truckers: The revival of the U.S. consumer and the more consistent re-stocking of retailer shelves and backroom inventories at industrial companies aids railroads CSX and Union Pacific. The CSX merchandise business that ships manufactured consumer goods, for example, accounts for close to 60 percent of the company's annual revenue. The Dow Jones Railroad Index has gained 6.7 percent in three months' time.

Not to be left from the discussion on transports: truckers and logistics companies UPS, FedEx and JB Hunt, which will be carrying more goods, more often. The pickup in demand could perhaps alleviate the nagging driver shortage in the trucking industry as companies sweeten pay packages. Fatter wallets for truck operators is music to the ears of pit stop Denny's and the local Walmart that absorbs the check the trucker is sending home to the wife and kids.

Restaurants: Greater spending activity by the U.S. consumer will likely bring with it pricing power in Corporate America. One area that is ripe for price increases following years of inflation and investments in new equipment and store designs is the restaurant sector. Buffalo Wild Wings President and CEO Sally J. Smith told CNBC's Becky Quick on Dec. 19 the company has "not seen" an impact to restaurant traffic following a November price increase borne from wing price inflation.

Decoded: pricing power. Richer profit lines for restaurants could open the door to execs taking more risks on the menu (new alcoholic/non-alcoholic drinks, portable food options at sit-down restaurants for example) and step up the pace of investments on mobile ordering (which will help those aforementioned semiconductors).

Here comes corporate pricing power in 2015, and possibly fewer sales.
Brian Sozzi
Here comes corporate pricing power in 2015, and possibly fewer sales.

Gas prices: Unfortunately, the downside to non-zombie U.S. consumers driving around to malls and restaurants to spend, spend, spend: gas prices are likely to creep higher in 2015. Remember, miles driven by U.S. consumers have generally been flat post-Great Recession.

Commentary by Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. Follow him on Twitter @BrianSozzi.

Disclosure: Neither Brian Sozzi nor Belus Capital Advisors own shares of any of the stocks mentioned here.