In this article, we will take a look at the 5 best summer stocks to buy now. You can skip our analysis of these companies and go directly to the 10 Best Summer Stocks To Buy Now.
5. McDonald’s Corporation (NYSE: MCD)
Number of Hedge Fund Holders: 62
Fast-food behemoth McDonald’s Corporation (NYSE: MCD) ranks 5th in our list of 10 best summer stocks to buy now. The Chicago-based fast-food firm operates nearly 40,000 McDonald’s in over 119 markets globally. MCD stock has been on a full-fledged rally and gained 10.5% in the last 3 months, after remaining dormant for the first quarter of this year. McDonald’s Corporation is one of the restaurants that will prosper this summer as more people go out to eat now that the lockdown in several states and countries has been lifted.
The company has a market cap of $175 billion and total revenues of $5.12 billion in the first quarter of 2021, up 9% year over year. McDonald’s Corporation pays an annual dividend of $5.16 per share with a 2.2% dividend yield. On May 4, Telsey Advisory Group analysts maintain their Outperform rating on McDonald’s Corporation, with a $260 price target. The stock closed at $234.8 per share on May 7.
There were 62 hedge funds that reported owning stakes in McDonald’s Corporation (NYSE: MCD) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $2.89 billion.
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4. Airbnb, Inc. (NASDAQ: ABNB)
Number of Hedge Fund Holders: 68
Home rental platform Airbnb, Inc. (NASDAQ: ABNB) ranks 4th in our list of the best summer stocks to buy now. The travel platform went public at the end of 2020, and its stock has risen 22% from its initial public offering price of $146 per share. The company now has a market cap of $93.4 billion. Airbnb currently has 4 million hosts in 200 countries that have hosted 800 million guests, and the company is trying to attract millions more to meet potential demand.
The company’s revenue in the fourth quarter of 2020 was $859 million, easily exceeding analysts’ expectations of $748 million, and full-year revenues were just down 30% to $3.4 billion compared to 2019. Needham analysts initiate coverage of Airbnb, Inc. with a Buy rating and a $210 price target.
There were 68 hedge funds that reported owning stakes in Airbnb, Inc. (NASDAQ: ABNB) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $1.61 billion.
Blue Hawk Investment Group said that Airbnb, Inc. has a desirable growth profile due to its charismatic position in the travel ecosystem in its Q4 2020 investor letter:
“We typically avoid new issues, with ABNB being a rare exception. ABNB fits right into our wheelhouse as a leader in a promising industry, with a disruptive business model, unique company culture, massive addressable market, and a name synonymous with a category (“got an Airbnb for the weekend”). Towards the end of the year, the narrative of the hot IPO/SPAC environment we found to be fitting, with an exception. We believe grouping ABNB into this category is a mistake. The IPO was botched, but the mistake was the initial offering price being far too low in this case. We believe the reason for this initial mispricing was the proximity of the IPO to the vaccine effectiveness data release. The data turned out to be much better than anticipated, a blue-sky result, causing a drastic change in the outlook for travel and lodging, the industry in which ABNB operates. Bayes Theorem in action, people typically have a bias when incorporating new information, in that they do not adjust their view as quickly as they should, and the vaccine data release required an almost complete reversal of views.
Back to the company, we started buying on day one and continued to build a position into the $120s and $130s. A founder-led firm, we believe the company has an excellent management team, a very attractive growth profile with many levers at their disposal, and embedded optionality due to their attractive position in the travel ecosystem (and minimal reliance on Google). The most underappreciated aspect of the story is the attractiveness of the financial model. Not many IPOs come along that get us excited, but we believe the future is bright for this young company. We will reveal more details about our thesis in future letters.”
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3. Expedia Group, Inc. (NASDAQ: EXPE)
Number of Hedge Fund Holders: 76
Online travel firm Expedia Group, Inc. (NASDAQ: EXPE) is placed 3rd in our list of 10 best summer stocks to buy now. The Seattle-based travel retail company offers vacation rentals and travel bundles through Expedia.com, Hotels.com, and Vrbo.com, and Trivago.com. Expedia Group, Inc. also provides car rental services through CarRentals.com.
The company has a market cap of $24.5 billion and total revenues of $1.25 billion in the first quarter of 2021. On May 7, BTIG Research analysts maintained their Buy rating on Expedia Group, Inc., with a $210 price target. Shares of EXPE surged 150% over the past twelve months.
There were 76 hedge funds that reported owning stakes in Expedia Group, Inc. (NASDAQ: EXPE) at the end of the fourth quarter, up from 64 funds a quarter earlier. The total value of these stakes at the end of Q4 is $6.6 billion.
2. Booking Holdings Inc. (NASDAQ: BKNG)
Number of Hedge Fund Holders: 108
Travel and restaurant online reservation platform Booking Holdings Inc. (NASDAQ: BKNG) ranks 2nd in our list of the 10 best summer stocks to buy now. The digital booking company was founded in 1997 in Norwalk, Connecticut. The company operates Booking.com, which offers online reservation services to various travel destinations worldwide and features travel bundles that include accommodation and air and land transfers. Booking Holdings Inc. also operates other online travel and car rental services, namely Agoda, Priceline, KAYAK, and RentalCars.com.
The company has a market cap of over $95 billion. In the first quarter of 2021, the company’s revenue was $1.14 billion. The company’s cash balance jumped to over $12 billion from $10.5 billion in December 2020. On May 6, Barclays kept a buy rating on Booking Holdings and raised the price target to $2,740. Shares of BKNG increased 63% over the past twelve months.
There were 108 hedge funds that reported owning stakes in Booking Holdings Inc. (NASDAQ: BKNG) at the end of the fourth quarter, up from 64 funds a quarter earlier. The total value of these stakes at the end of Q4 is $8.24 billion.
Image by Edeltravel_ from Pixabay
1. The Walt Disney Company (NYSE: DIS)
Number of Hedge Fund Holders: 144
Topping the 10 best summer stocks list to buy now is American entertainment giant The Walt Disney Company (NYSE: DIS). When it comes to the best summer stocks to invest in, Disney is perhaps one of the most popular companies with pent-up demand, as the company’s theme parks and resorts in California recently reopened. On top of that, The Walt Disney Company is also making a dent in the streaming industry with its booming Disney+ video streaming business. Since its launch in 2019, Disney+ has already surpassed 100 million subscribers. According to Disney, its streaming service user base will be between 230 million and 260 million by 2024.
The company has a market cap of over $335 billion. The Walt Disney Company’s revenue came in at $16.2 billion in the first quarter of 2021. The stock has gained 69% in the last twelve months. Wells Fargo maintained an Overweight position in Walt Disney and raised its price target to $219 on April 20.
There were 144 hedge funds that reported owning stakes in The Walt Disney Company (NYSE: DIS) at the end of the fourth quarter, up from 112 funds a quarter earlier. The total value of these stakes at the end of Q4 is $16.4 billion.
New Jersey-based investment management firm Harding Loevner Lp said that The Walt Disney Company strengthened its direct customer engagement, which helped the company harvest a substantial return of insights used to customize offerings on a large scale in its Q4 2020 investor letter:
“One of the original constituents of the Nifty Fifty holds a place in our portfolio today. When we bought Disney three years ago, we wrote that ‘we view Disney theme parks in the US, Europe, and China as resistant to online substitution.’ We did not reckon on a pandemic, which closed all of them, and sent us to our couches. Disney, however, was ready for us, brilliantly illustrating the importance of management foresight and change management. Or, as Louis Pasteur said, “chance favors the prepared mind.”
A century after its founding in 1923, Disney is in the middle of a bold shift from its legacy media networks & entertainment model—with cable TV, theme parks, and theater films dominating its earnings—to a direct-to-consumer streaming media model. The keys to Disney’s transition: matchless storytelling, coupled with financial strength. The company reliably creates content that people all over the world are eager to consume. It also hastened spending on original content to attract subscribers to its new streaming platform. These factors have allowed Disney to weather the pandemic, having expanded its direct engagement with customers. Such connections yield a rich harvest of insights used to customize offerings on a mass scale, reinforcing that engagement in a virtuous circle and thereby raising the lifetime value of each customer. Subscribers to Disney+ reached 86.8 million one year after launch, compared to the 60 – 90 million management projected to reach in 2024. To be sure, Netflix, Apple, and Amazon remain formidable competitors in new-era streaming entertainment (mind what we said about everyone standing up at once), but there’s fight left in this old dog.”
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