In this article, we will take a look at the 10 best summer stocks to buy now. You can skip our comprehensive analysis of these companies and go directly to the 5 Best Summer Stocks to Buy Now.
The COVID-19 pandemic caused the cancellation of summer vacation plans in 2020. Travel destinations worldwide had 1 billion fewer international visitors in 2020, which caused a direct impact on the booking, entertainment, airlines, cruises, and hotel stocks. The tourism and entertainment companies, including digital travel firm Expedia Group, Inc. (NASDAQ: EXPE), airline company Delta Air Lines, Inc. (NYSE: DAL), and Disneyland owner The Walt Disney Company (NYSE: DIS), experienced difficult times in 2020 and lost billions in revenues due to the coronavirus outbreak.
However, the mass rollouts of COVID-19 vaccines worldwide has investors hopeful for a strong recovery. According to a poll conducted by travel insurance company Allianz Partners USA, 67% of participants believe that getting the COVID-19 vaccine will make them feel comfortable enough to travel again this year. The widespread roll-out of vaccines also boosted the demand for international travel. More than three-quarters of global travelers would be more likely to fly abroad if they obtain the vaccine, according to a TripAdvisor, Inc. (NASDAQ: TRIP) report.
What Will Summer Vacation Look Like in 2021?
With vaccinations becoming more widely available, the travel industry is undergoing a massive transformation that continues to evolve as more Americans return to the road. According to TripAdvisor, Inc. (NASDAQ: TRIP), 67% of Americans expect to travel this summer, with 74% staying in the United States. The outdoor activities American families are eyeing this summer include beach day, socially distanced barbecue day, camping trip, and pool day.
According to Priceline.com, among the top destinations with tropical locales and warm weather that Americans are preparing to book their summer vacations at include Oahu in Hawaii, Orlando in Florida, Las Vegas in Nevada, and New Orleans in Louisiana. Priceline.com is an online travel agency owned and operated by Booking Holdings Inc. (NASDAQ: BKNG). Among the company’s travel-related services are hotel accommodation, plane tickets, rental cars, holiday packages, cruises, travel activities at consumer destinations, and travel insurance. In the first quarter of 2021, Booking Holdings Inc. (NASDAQ: BKNG) sold 3 million airline tickets, up from 2 million in the pre-COVID first quarter of 2019. BKNG is one of the best summer stocks to buy now.
Domestic travel is bound to surge this summer as more Americans opt to visit local attractions, with 70% of car rentals being used for road trips within their state, covering an average distance of 184 miles. With the rising tourism activities, New Jersey-based car rental company Avis Budget Group, Inc. (NASDAQ: CAR) is set to see growth. Avis Budget Group, Inc. (NASDAQ: CAR) took advantage of pricing opportunities as demand in the Americas began to rebound in the second half of the quarter and ended the first quarter with a 12% rise in sales per day. Avis Budget Group, Inc. (NASDAQ: CAR)’s revenue in the first quarter of 2021 was $1.37 billion. Over the past quarter, shares of Avis Budget Group have risen 90.17% and are up 525.8% in the last year. On the other hand, the S&P 500 has only moved 8.9% and 44.47%, respectively.
Expedia Group, Inc. (NASDAQ: EXPE) is another stock that is set to benefit from the travel boom. At the end of the fourth quarter, 76 hedge funds tracked by Insider Monkey reported owning stakes in the company, compared to 64 funds in the previous quarter. This sharp increase is a sign the smart money is loading up on Expedia Group, Inc. (NASDAQ: EXPE) to take benefit from the incoming recovery.
Just in time for summer travel, online homestay booking platform Airbnb, Inc. (NASDAQ: ABNB) launched its “Summer of Responsible Travel” plan as part of its commitment to fulfilling a safer travel experience for travelers. The company’s summer travel plan bans parties such as the 4th of July. Airbnb, Inc. (NASDAQ: ABNB) is up 3% year to date.
The Walt Disney Company (NYSE: DIS)
The Walt Disney Company (NYSE: DIS) preserved its magic even in the worst of the pandemic. After more than a year, Disneyland and Disney’s California Adventure in California recently opened on April 30. Under state health regulations, The Walt Disney Company’s theme parks can only handle 25% of their capacity, but this is a vital first step toward restoring revenue. The Walt Disney Company’s (NYSE: DIS) revenue came in at $16.2 billion in the first quarter of 2021. Disney Media and Entertainment segment accounted for $12.7 billion in revenues.
Just like the travel and entertainment industries, the hedge fund industry is also seeing winds of change. The entire hedge fund industry is feeling the repercussions of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26 2021, our monthly newsletter’s stock picks returned 197.2%, vs 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Mesut Kaya on Unsplash
With this context in mind, here is our list of the 10 best summer stocks to buy now.
Best Summer Stocks to Buy Now
10. Winnebago Industries, Inc. (NYSE: WGO)
Number of Hedge Fund Holders: 27
We start our list of 10 best summer stocks to buy now with recreational vehicle producer Winnebago Industries, Inc. (NYSE: WGO). The company, headquartered in Forest City, Iowa, manufactures motorhome and outdoor lifestyle products under Grand Design, Chris-Craft, and Winnebago. Winnebago Industries, Inc. (NYSE: WGO) produces high-quality RVs, travel trailers, fifth-wheel products, and boats.
The company has a market cap of $2.7 billion. Winnebago Industries, Inc. (NYSE: WGO)’s revenue came in at $840 million in the second quarter of 2021. Sales rose by 34%, owing to increased consumer demand in both the towable and motorhome segments. Shares of WGO jumped 71% over the past twelve months. On March 25, Truist Securities analysts maintained their Buy rating on Winnebago Industries, Inc., with a $95 price target.
Like Expedia Group, Inc. (NASDAQ: EXPE), WGO is one of the best summer stocks to invest in now.
There were 27 hedge funds that reported owning stakes in Winnebago Industries, Inc. (NYSE: WGO) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $311 million.
9. Avis Budget Group, Inc. (NASDAQ: CAR)
Number of Hedge Fund Holders: 28
American car rental firm Avis Budget Group, Inc. (NASDAQ: CAR) ranks 9th in our list of 10 best summer stocks to buy now. As American families plan to spent summer 2021 outside, the car rental company gains its momentum. Avis Budget Group, Inc. (NASDAQ: CAR) offers car rentals and car-sharing services. In the first quarter, Avis Budget recorded a 12% increase in revenue per day in the US, and these positive pricing trends have primarily carried into the second quarter.
The company has a market cap of $5.6 billion. The company’s revenue in the first quarter fell 22% year over year to $1.37 billion. Revenues improved sequentially in the quarter, with sales per day in the Americas rising by 12% as demand strengthened. Shares of CAR surged 525.8% over the past twelve months. On May 5, Morgan Stanley kept its equal-weight rating on Avis Budget Group, Inc. (NASDAQ: CAR) and raised its price target to $73 per share.
There were 28 hedge funds that reported owning stakes in Avis Budget Group, Inc. (NASDAQ: CAR) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $1.05 billion.
8. Hilton Grand Vacations Inc. (NYSE: HGV)
Number of Hedge Fund Holders: 31
Franchise resort and hotel operator Hilton Grand Vacations Inc. (NYSE: HGV) ranks 8th on the list of the best summer stocks to buy now. The Orlando-based timeshare property company is a subsidiary of Hilton Worldwide Holdings Inc. (NYSE: HLT). Hilton Grand Vacations Inc. sells vacation ownership intervals, manages resorts, operates a points-based vacation club, and finances and services loans provided to consumers for their timeshare purchases. Hilton Worldwide Holdings Inc. (NYSE: HLT)’s luxurious vacation resort and hotel properties are primarily located in some of the most popular summer spots in the US, including Hawaii, New York, South Carolina, and Florida. Hilton Grand Vacations Inc. also operates in Mexico and Barbados.
The company has a market cap of $3.7 billion and total revenues of $235 million in the first quarter. Shares of HGV increased 149% over the past twelve months.
There were 31 hedge funds that reported owning stakes in Hilton Grand Vacations Inc. (NYSE: HGV) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $759 million.
7. Pool Corporation (NASDAQ: POOL)
Number of Hedge Fund Holders: 33
Louisiana-based swimming pool supplies distributor Pool Corporation (NASDAQ: POOL) ranks 7th in our list of 10 best summer stocks to buy now. With over 395 locations worldwide, the company offers swimming pool appliances, parts and accessories, and related outdoor living items. The company also sells grills, hot tubs, and components for outdoor kitchens.
The company has a market cap of $17.5 billion and net sales of $1.06 billion in the first quarter. Shares of POOL increased 99% over the past twelve months. In April, Loop Capital analyst Garik Shmois analyst lifted his price target to $405 while keeping his Buy rating on Pool Corporation (NASDAQ: POOL).
There were 33 hedge funds that reported owning stakes in Pool Corporation (NASDAQ: POOL) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $871 million.
6. Delta Air Lines, Inc. (NYSE: DAL)
Number of Hedge Fund Holders: 58
American airline giant Delta Air Lines, Inc. (NYSE: DAL) ranks 6th in our list of the best summer stocks to buy now. The Atlanta-based company flies over 1,000 planes and operates hundreds of international destinations, including Mexico City, Amsterdam, London-Heathrow, and Seoul-Incheon.
The company has a market cap of $28.7 billion. The company’s revenue came in at $17 billion in 2020, down from more than $40 billion in 2019. The company remains optimistic about its decision to extend its aircraft seat selection to premium economy seating, predicting that as international leisure travel demand recovers over the next year or two, this upgrade will result in a surge in demand for Delta Air Lines, Inc. (NYSE: DAL)’s premium seat upgrade.
Like Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), Booking Holdings Inc. (NASDAQ: BKNG), DAL is one of the best summer stocks to buy in 2021.
There were 58 hedge funds that reported owning stakes in Delta Air Lines, Inc. (NYSE: DAL) at the end of the fourth quarter, up from 43 funds a quarter earlier. The total value of these stakes at the end of Q4 is $1.06 billion.
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Disclosure: None. 10 Best Summer Stocks To Buy Now is originally published on Insider Monkey.
