In this article, we discuss the 11 best summer stocks to buy now. In order to skip our detailed analysis of these stocks and the latest market situation, go directly to 5 Best Summer Stocks To Buy Now.
Imagine finally going on a much-awaited, much-planned family trip to Florida’s Disneyland this summer. Won’t that be a breathe of fresh air after facing months of consistent lockdowns and pandemic restrictions? Well, you’re not alone, as millions of people this summer will ramp up recreational and tourism activities to get a taste of ‘normal’ life again. The World Travel & Tourism Council (WTTC), a firm which represents the global tourism and travel industry, forecasts that travel and tourism in the United States will contribute almost $2 trillion to the US economy in 2022, reaching pre-pandemic levels again. The International Air Transport Association, speaking on behalf of nearly 300 airlines, says airports are set to see huge numbers of flyers again in 2022, up 150% from last year’s figures.
Investors would be wise to keep an eye out for ‘summer’ stocks, which are perfectly poised to enjoy a boom as tourism activity peaks in the warmer months. These are all the companies which facilitate different aspects of travel, tourism and recreational activities. These include airlines such as Delta Air Lines, Inc. (NYSE:DAL), car rental companies such as Avis Budget Group, Inc. (NASDAQ:CAR), and accommodation plays such as Airbnb, Inc. (NASDAQ:ABNB), as well as resort destinations such as The Walt Disney Company (NYSE:DIS).
Let’s now go ahead and take a look at our list of the 11 best summer stocks to buy now.
Source: Unsplash
Our Methodology
We picked 11 summer stocks with the most growth and earnings potential in the 2022 summer. We also looked for positive analyst ratings and solid business fundamentals. Data from 924 elite hedge funds tracked by Insider Monkey at the end of the fourth quarter was used to identify the number of hedge funds that hold positions in each firm.
Best Summer Stocks To Buy Now
11. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Holders: 27
Avis Budget Group, Inc. (NASDAQ:CAR) starts off our list of the best summer stocks to buy. The New Jersey-based firm offers car rentals, truck rentals and car-sharing services to millions of customers in the United States. It enjoys a strong earnings season in the summers, as increased consumer activity and tourism leads to people renting out more cars. As of May 6, shares of Avis Budget Group, Inc. (NASDAQ:CAR) have gained 211.15% in the last 12 months, and 26.53% in the year to date.
On April 20, Barclays analyst Brian Johnson upgraded Avis Budget Group, Inc. (NASDAQ:CAR) to ‘Equal Weight’ from ‘Underweight’ with a revised price target of $245, up from $164. The analyst is “incrementally constructive” on the rental car space in an inflationary environment, as rental companies benefit from holding cars which appreciate in price over time. He notes that car rental companies also benefit from supply constraints through increased prices and forced discipline across the sector.
For the first quarter of 2022, Avis Budget Group, Inc. (NASDAQ:CAR) posted earnings per share of $9.99, which outperformed estimates by $6.45. $2.43 billion in quarterly revenue recorded year-on-year growth of 77.26%, and also beat analysts’ forecasts by $295.9 million.
27 hedge funds held stakes in Avis Budget Group, Inc. (NASDAQ:CAR) at the end of the fourth quarter of 2021, with combined stakes worth $4.3 billion. This is up from 26 hedge funds a quarter ago with $2.46 billion worth of positions in the firm. SRS Investment Management was by far the largest Q4 2021 shareholder of Avis Budget Group, Inc. (NASDAQ:CAR), with more than 18.4 million shares worth $3.82 billion.
Broyhill Asset Management, an investment firm, discussed Avis Budget Group, Inc. (NASDAQ:CAR) in its Q4 2021 investor letter, stating:
“Avis surged 166% during the final two quarters of the year. The company hit a new record for quarterly EBITDA – third quarter EBITDA was higher than any full year in Avis history – while buying back nearly $1B of stock and announcing another $1B increase in their repurchase authorization. Shares hit an intra-day peak of $545 after reporting earnings, ultimately closing at $357, more than doubling the prior close. Frenzied retail trading, prompted by management commentary around electric vehicles adoption, prompted a dozen trading halts throughout the day. The mania grew so intense that TD Ameritrade stopped allowing short sales in Avis, as short interest represented ~ 30% of the float.”
Along with Delta Air Lines, Inc. (NYSE:DAL), The Walt Disney Company (NYSE:DIS), and Airbnb, Inc. (NASDAQ:ABNB), Avis Budget Group, Inc. (NASDAQ:CAR) is one of the most exciting stocks to buy this summer.
10. Winnebago Industries, Inc. (NYSE:WGO)
Number of Hedge Fund Holders: 27
Winnebago Industries, Inc. (NYSE:WGO) is a maker of recreational vehicles (RV) and marine products used for outdoor recreation activities. Cabin fever induced by the frustratingly long Covid lockdowns have resulted in firms like Winnebago Industries, Inc. (NYSE:WGO) getting extra attention as people finally find the freedom to head outdoors for adventures.
DA Davidson analyst Brandon Rolle sees Winnebago Industries, Inc. (NYSE:WGO) as the stock to own in the recreational vehicle space given its impressive track record of outperforming peers in earnings and healthy balance sheet. He initiated coverage of the firm with a ‘Buy’ rating and a price target of $70 on April 13.
The company posted an EPS of $3.14 for the fourth quarter of 2021, beating estimates by $0.23. Quarterly revenue was recorded at $1.16 billion, surpassing analysts’ expectations by $63.3 million and signaling a jump of 38.7% from the year-ago quarter.
Investors were seen buying into Winnebago Industries, Inc. (NYSE:WGO), with 27 hedge funds reporting bullish bets on the company shares at the end of the fourth quarter, in comparison to 24 hedge funds a quarter ago. Fisher Asset Management was the largest shareholder of Winnebago Industries, Inc. (NYSE:WGO) at the end of December, with a position consisting of 1.68 million shares worth $126.6 million.
9. Hilton Grand Vacations Inc. (NYSE:HGV)
Number of Hedge Fund Holders: 30
Hilton Grand Vacations Inc. (NYSE:HGV) features next on our list of the best stocks to buy this summer. The Orlando-based firm manages and operates vacation ownership resorts across the US, Europe, and Asia. It offers timeshare properties, where each property has multiple, joint owners who can use the premises for a limited time before the next owner gets their turn. Hilton Grand Vacations Inc. (NYSE:HGV) operates as a subsidiary of Hilton Worldwide Holdings Inc. (NYSE: HLT), and deals in the provision of loans to consumers for timeshare resort purchases as well.
Of the 900+ elite hedge funds tracked by Insider Monkey at the end of the fourth quarter of 2021, 30 hedge funds were long Hilton Grand Vacations Inc. (NYSE:HGV). The combined value of these stakes stood at $1.22 billion. CAS Investment Partners held 7.72 million shares of the firm at the close of the fourth quarter worth $402.7 million, making it the biggest shareholder of the firm.
On March 8, Truist analyst C. Patrick Scholes raised the firm’s price target on Hilton Grand Vacations Inc. (NYSE:HGV) to $63 from $60 and reiterated a ‘Buy’ rating on the company shares. He notes that the vacation ownership product finds itself in the “sweet-spot” of post-Covid trends as more people value the newfound ability to vacation and work remotely,
For the fourth quarter of 2021, Hilton Grand Vacations Inc. (NYSE:HGV) reported an EPS of $0.80, outperforming estimates by $0.02. Revenue of $838 million for the quarter also beat analysts’ expectations by $41.8 million and showed a remarkable increase of 295.3% from the year-ago quarter.
8. Pool Corporation (NASDAQ:POOL)
Number of Hedge Fund Holders: 38
Summer time is when the swimming pools get busy, and Pool Corporation (NASDAQ:POOL) is all about making money from selling pool equipment, pool maintenance products, and pool building and remodelling equipment. The company sells its products through a network of 400+ sales centers in North America, Europe, and Australia.
Baird analyst David Manthey in late April maintained an ‘Outperform’ rating on Pool Corporation (NASDAQ:POOL) shares, and lowered the price target to $550 from $600. He notes that concerns of slowing growth are unfounded as the firm boasts an affluent profile of pool owners and significant recurring maintenance sales. The analyst suggests taking advantage of the firm’s year-to-date underperformance to buy the shares at an attractive valuation.
For the first quarter of 2022, Pool Corporation (NASDAQ:POOL) disclosed earnings per share of $4.23, which exceeded analysts’ expectations by $1.14. $1.41 billion in quarterly revenue jumped 33.18% in comparison to the year-ago quarter, and beat consensus estimates by $142.4 million.
Out of all the hedge funds tracked by Insider Monkey, Select Equity Group was the largest shareholder of Pool Corporation (NASDAQ:POOL) at the end of the fourth quarter of 2021 with a stake worth approximately $477 million. In total, 38 hedge funds reported bullish bets on Pool Corporation (NASDAQ:POOL) in Q4 2021, with aggregate stakes worth $1.39 billion.
Wasatch Global Investors, an investment firm, talked about Pool Corporation (NASDAQ:POOL) in its Q4 2021 investor letter, stating:
“An example of a company with what we consider a superior long-term business model is Pool Corp. (POOL), a wholesale distributor of swimming pools and related supplies. The company’s customers include more than 120,000 contractors and retailers. Pool offers approximately 200,000 national-brand and private-label products from more than 2,000 suppliers. In an industry characterized by fragmented suppliers and fragmented customers, the company has become the premier consolidator of product distribution. We’ve owned Pool for over 20 years (Sam was involved in our initial research of the company), and over this time, the stock has had several periods in which it was down more than 20%. In hindsight, each of these down periods was simply a great buying opportunity. While investors have fretted from time to time over how inflation, interest rates, economic cycles and home-construction statistics would affect backyard recreation, Pool Corp. has remained focused on service improvements. And these improvements have turned out to be much more important than periodic macro trends.
Our general view regarding such trends is that if they’re truly important, they’ll show up in our company-specific fundamental analysis. So while other investors ponder index performance and trends like “growth” versus “value” cycles, we’ll stay focused on business-model quality—which tends to influence the long-term power of sales, earnings and cash flows.”
7. SeaWorld Entertainment, Inc. (NYSE:SEAS)
Number of Hedge Fund Holders: 41
SeaWorld Entertainment, Inc. (NYSE:SEAS) is a theme park stock which ranks next on our list of the best summer stocks to buy. The Florida-based entertainment giant operates a network of theme and water parks under the brands SeaWorld, Busch Gardens, Discovery Cove, Aquatica, Water Country USA, Adventure Island, and Sesame Place.
B. Riley analyst Eric Wold on April 21 maintained a ‘Buy’ rating on SeaWorld Entertainment, Inc. (NYSE:SEAS) shares and raised the price target to $94 from $83. The analyst is bullish on the firm’s free cash flow outlook, and highlights it as his top pick within his theme park sector coverage.
The company’s revenue for the first quarter of 2022 was recorded at $270.69 million, beating estimates by $7.5 million and signaling a jump of 57.5% year-on-year. EPS stood at -$0.05, also outperforming estimates by $0.09. As of May 6, shares of SeaWorld Entertainment, Inc. (NYSE:SEAS) have increased 16.51% in the last 12 months.
Investors were seen piling into SeaWorld Entertainment, Inc. (NYSE:SEAS). At the end of the fourth quarter, 41 hedge funds held positions in the theme park giant with a price tag of $2.5 billion. In comparison, 38 hedge funds were bullish on the company shares a quarter earlier, with aggregate stakes worth $2.2 billion. Hill Path Capital held a $1.76 billion stake in SeaWorld Entertainment, Inc. (NYSE:SEAS) at the close of the fourth quarter, making it the biggest shareholder of the firm.
6. Six Flags Entertainment Corporation (NYSE:SIX)
Number of Hedge Fund Holders: 46
Six Flags Entertainment Corporation (NYSE:SIX) is a Texas-based water and theme park giant which operates 27 parks in the United States, Mexico, and Canada. It ranks as one of the hottest stocks to buy this summer, and was given a ‘Buy’ rating by B. Riley analyst Eric Wold on April 21, who remains confident in the firm’s ability to drive EBITDA growth. The analyst revised the price target on Six Flags Entertainment Corporation (NYSE:SIX) shares to $55 from $63.
For the fourth quarter of 2021, Six Flags Entertainment Corporation (NYSE:SIX) recorded revenue of $316.8 million, which signaled a jump of 191.7% from the year-ago quarter, and outperformed estimates by $48.5 million. EPS stood at -$0.02 which also beat estimates by $0.06.
Out of all the hedge funds tracked by Insider Monkey, 46 hedge funds reported bullish bets on Six Flags Entertainment Corporation (NYSE:SIX) shares with aggregate positions worth $1.23 billion. This shows bullish investor sentiment from the previous quarter where 42 hedge funds held $1.04 billion worth of stakes in the firm. H Partners Management upped its stake by 13% in Six Flags Entertainment Corporation (NYSE:SIX) at the end of the fourth quarter to consist of 8.92 million shares worth more than $380 million, making it the largest shareholder of the firm.
In addition to Delta Air Lines, Inc. (NYSE:DAL), The Walt Disney Company (NYSE:DIS), and Airbnb, Inc. (NASDAQ:ABNB), Six Flags Entertainment Corporation (NYSE:SIX) is one of the best summer stocks to buy now.
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