In this article, we discuss the 10 stocks to buy to profit from post-COVID economic recovery. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks to Buy to Profit from Post-COVID Economic Recovery.
Inflation fears and a cryptocurrency slump in recent weeks have hit some of the prospects for the post-COVID economic recovery. However, with the vaccine rollout in the United States proceeding forward at a healthy pace and international travel activities resuming, the post-pandemic boom is well and truly underway. Some of the stocks that investors can look towards in hopes of riding these growth catalysts include Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), and Comcast Corporation (NASDAQ: CMCSA).
Airbnb, Inc. (NASDAQ: ABNB), the online platform that connects renters with those who need short-term lodging, can power through the coming few months with strong recovery momentum behind it. On June 21, investment advisory Baird maintained an Outperform rating on the stock with a price target of $200. Colin Sebastian, an analyst at the firm, underlined the platform improvements and focused marketing campaigns of the company that he said would enable Airbnb to capitalize through the rest of the year.
The Walt Disney Company (NYSE: DIS), perhaps one of the most recognizable brands in the world, is also expected to be one of the big gainers of the year as theme parks reopen in tandem with relaxed social distancing rules and easing mask mandates. According to investment bank UBS, theme parks could be back to pre-COVID operating levels as early as the holiday season this year. However, UBS has cautioned that full-year recovery for the sector is not expected for at least another two years.
With the relaxation of lockdown rules, another stock that could benefit is Comcast Corporation (NASDAQ: CMCSA), the telecom firm that owns several broadcast channels and film studios. The relaxations would allow the company to resume filming, and as cinemas reopen, another source of revenue would be added to the money pipeline that would strengthen the firm in the coming weeks and months. As the internet streaming business of the firm grows, it could rival other streaming giants in the space because of sheer capital backing.
The tilt towards internet streaming has been necessitated by the digitization of the world in recent years. The entire hedge fund industry is feeling the reverberations 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 26th 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 16th. 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.
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With this context in mind, here is our list of the 10 stocks to buy to profit from post-COVID economic recovery. These were selected based on the upside potential they offer as the economy reopens, the overall market ratings, and hedge fund sentiment around the companies.
Stocks to Buy to Profit from Post-COVID Economic Recovery
10. Hilton Worldwide Holdings Inc. (NYSE: HLT)
Number of Hedge Fund Holders: 47
Hilton Worldwide Holdings Inc. (NYSE: HLT) is a company that owns and runs several hotels and resorts across the world. It is placed tenth on our list of 10 stocks to buy to profit from post-COVID economic recovery. The company’s shares have offered investors returns exceeding 74% over the course of the past twelve months. The company has been investing heavily in Las Vegas in recent years, doubling its footprint in three years with plans to expand to 30 hotels in the area by the end of this year.
On June 15, investment advisory Argus maintained a Buy rating on Hilton Worldwide Holdings Inc. (NYSE: HLT) stock with a price target of $145. The investment advisory also raised the 2021 earnings per share estimate on the hotel firm to $2.6 from $2.56.
At the end of the first quarter of 2021, 47 hedge funds in the database of Insider Monkey held stakes worth $5 billion in Hilton Worldwide Holdings Inc. (NYSE: HLT), down from 60 the preceding quarter worth $6 billion.
Just like Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), and Comcast Corporation (NASDAQ: CMCSA), Hilton Worldwide Holdings Inc. (NYSE: HLT) is one of the stocks to buy to profit from post-COVID economic recovery.
In its Q1 2021 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Hilton Worldwide Holdings Inc. (NYSE: HLT) was one of them. Here is what the fund said:
“Hilton is the second largest hotel company in the world after Marriott International (MAR). The company owns a portfolio of brands from the low end (Hampton Inn, Hilton Garden Inn), through the mid-tier (DoubleTree, Hilton, Curio, Embassy Suites, Homewood Suites), to the luxury high end (Waldorf Astoria, Conrad, LXR). Hilton’s portfolio is almost perfectly balanced between the three categories, while the majority (73%) of the company’s EBITDA geographic exposure is in the United States with Asia Pacific and Europe each contributing another 10%. Hilton today is almost exclusively a manager and franchisor of hotels, not a hotel owner. The company owns 61 hotels, manages 715 and franchises 5,702 – in total 6,478 properties with over 1 million combined rooms.8 Like all franchise based businesses Hilton requires very little capital to grow as it utilizes the investment capital of its hotel-owners/partners to expand. Hilton currently faces a difficult operating environment due to the covid-19 pandemic and uncertainty about the future of business travel. However, the company is an excellent operator with a somewhat leveraged capital structure – if pent-up demand for travel materializes post-Covid, as we expect it will, the company will quickly go from losing money to raking in profits.
Hilton last reported earnings on February 17th, with both top and bottom line disappointing investment analysts’ expectations. However, these poor results are not indicative of the company’s long-term outlook. In normal times, Hilton generates prodigious free cash flow which we expect will resume once travel demand returns. Over the longer term we expect Hilton to grow its topline at least twice as fast as GDP due to rising revenues per room and the growing number of rooms. Most importantly, the industry continues to consolidate with chain branded hotels taking market share from independent operations. With the superior marketing and loyalty programs offered by hotel chains (Hilton Honors has 112 million members) driving demand, independent hotel owners see the benefits of signing up with one of the dominant hotel chains (Hilton, IHG and Marriott). Furthermore, the company’s main growth opportunities remain abroad, as hotel chain penetration remains much lower outside the United States. Shares are up 9.34% year-to-date. We believe the shares are undervalued at 31.72x forward earnings.”
9. LyondellBasell Industries N.V. (NYSE: LYB)
Number of Hedge Fund Holders: 47
LyondellBasell Industries N.V. (NYSE: LYB) is a Dutch firm that makes and sells chemicals. The company has operations throughout Europe, North America, Asia, and other places. The company is expected to benefit from the surge in demand for chemicals and oil as the economy reopens following the lockdowns of 2020. It is ranked ninth on our list of 10 stocks to buy to profit from post-COVID economic recovery. The stock has returned 62% to investors over the course of the past year.
LyondellBasell Industries N.V. (NYSE: LYB) is a solid option for income investors as the firm pays a regular and healthy dividend. On May 28, it declared a quarterly dividend of $1.13 per share, up more than 7.5% from the previous dividend. The forward yield was close to 4%.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eagle Capital Management is a leading shareholder in LyondellBasell Industries N.V. (NYSE: LYB) with 2.9 million shares worth more than $308 million.
Just like Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), and Comcast Corporation (NASDAQ: CMCSA), LyondellBasell Industries N.V. (NYSE: LYB) is one of the stocks to buy to profit from post-COVID economic recovery.
8. Expedia Group, Inc. (NASDAQ: EXPE)
Number of Hedge Fund Holders: 86
Expedia Group, Inc. (NASDAQ: EXPE) is placed eighth on our list of 10 stocks to buy to profit from post-COVID economic recovery. The company’s shares have returned 121% to investors in the past year. It is an online travel firm based in Washington. The firm recently beat market expectations on earnings per share and revenue for the first quarter of 2021, reporting a 14% year-on-year increase in bookings on the platform that are set to increase further as the vaccine rollout allows for more business operations to resume.
On June 10, investment advisory Wells Fargo gave Expedia Group, Inc. (NASDAQ: EXPE) stock Overweight rating and placed the company in an attractive value and high momentum target list for investors in the consumer discretionary sector.
At the end of the first quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Expedia Group, Inc. (NASDAQ: EXPE), up from 76 in the previous quarter worth $6.5 billion.
Just like Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), and Comcast Corporation (NASDAQ: CMCSA), Expedia Group, Inc. (NASDAQ: EXPE) is one of the stocks to buy to profit from post-COVID economic recovery.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Expedia Group, Inc. (NASDAQ: EXPE) was one of them. Here is what the fund said:
“Several of our better performers in the first quarter were purchased while their business models were under stress from COVID restrictions or the macro environment the pandemic created. What gave us confidence in purchasing Expedia were the actions the company took to extend out their balance sheets until travel resumed. It should benefit as a broader vaccination rollout prompts cruise lines to resume operations and consumers to start traveling again and are positioned to deliver better margins and gain pricing power as the economy normalizes due to the cost controls implemented during the downturn.”
7. Delta Air Lines, Inc. (NYSE: DAL)
Number of Hedge Fund Holders: 50
Delta Air Lines, Inc. (NYSE: DAL) is one of the biggest airline carriers in the United States. As a travel boom follows the reopening of the economy, the company has been attracting positive reviews from analysts at investment advisories Jefferies and MKM. Jeffeires has a Buy rating on the stock and MKM has named it among its top picks for the travel recovery. The company is ranked seventh on our list of 10 stocks to buy to profit from post-COVID economic recovery. The stock has returned more than 65% to investors in the past twelve months.
On June 21, news platform CNBC reported that Delta Air Lines, Inc. (NYSE: DAL) was considering hiring close to 1,000 new pilots within the next twelve months as travel demand picked up around the world and business increased.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Delta Air Lines, Inc. (NYSE: DAL) with 4 million shares worth more than $195 million.
Just like Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), and Comcast Corporation (NASDAQ: CMCSA), Delta Air Lines, Inc. (NYSE: DAL) is one of the stocks to buy to profit from post-COVID economic recovery.
In its Q2 2020 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Delta Air Lines, Inc. (NYSE: DAL) was one of them. Here is what the fund said:
“Delta Air Lines Inc. (DAL) declined -1.38% over the period after the initial hit to the stock in 1Q following the outbreak of the COVID-19 pandemic. The company reported 1Q results with EPS of -$0.51, in-line with consensus. The company guided for June revenue to be down 90% YoY and announced another $1B cut to capital expenditures (CAPEX) for a total cut of $3B so far this year. The company ended the quarter with $6B in liquidity and they expect to end the June quarter with $10B in liquidity. Delta held its annual shareholders’ meeting where it noted that it expects to finish the 2nd quarter with over $15B in liquidity with a daily cash burn of $30M getting to breakeven by the end of the year.”
6. Simon Property Group, Inc. (NYSE: SPG)
Number of Hedge Fund Holders: 31
Simon Property Group, Inc. (NYSE: SPG) is a real estate investment trust that primarily focuses on investments in shopping malls. It is placed sixth on our list of 10 stocks to buy to profit from post-COVID economic recovery. The company’s shares have returned 111% to investors over the past year. The firm has a lot to gain as shopping malls reopen after more than a year in lockdown and shoppers, eager for some time outside and a return to normal after a horrid 2020, take to public places to regroup and relax.
Simon Property Group, Inc. (NYSE: SPG) is another great option for early retirement as the firm pays a sizable dividend. On June 21, the company declared a quarterly dividend of $1.4 per share, up 7.7% compared to the previous dividend. The forward yield was close to 4.5%.
At the end of the first quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $506 million in Simon Property Group, Inc. (NYSE: SPG), down from 32 in the previous quarter worth $353 million.
Just like Airbnb, Inc. (NASDAQ: ABNB), The Walt Disney Company (NYSE: DIS), and Comcast Corporation (NASDAQ: CMCSA), Simon Property Group, Inc. (NYSE: SPG) is one of the stocks to buy to profit from post-COVID economic recovery.
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Disclose. None. 10 Stocks to Buy to Profit from Post-COVID Economic Recovery is originally published on Insider Monkey.
