In this article, we discuss the 5 stocks to buy to profit from post-COVID economic recovery. If you want to read our detailed analysis of these stocks, go directly to the 10 Stocks to Buy to Profit from Post-COVID Economic Recovery.
5. Live Nation Entertainment, Inc. (NYSE: LYV)
Number of Hedge Fund Holders: 37
Live Nation Entertainment, Inc. (NYSE: LYV) is an entertainment company that manages ticket sales for different kinds of live events. Over the past few weeks, the stock has climbed close to 17% as concerts resume and bring in much-needed revenue for the company after a disappointing 2020. The firm is ranked fifth on our list of 10 stocks to buy to profit from post-COVID economic recovery. The stock has offered investors returns exceeding 117% over the course of the past twelve months.
On May 14, investment advisory Wolfe Research initiated coverage on Live Nation Entertainment, Inc. (NYSE: LYV) stock with an Outperform rating and a price target of $97 on the back of expectations of strong growth as the economy reopened following the pandemic.
Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Live Nation Entertainment, Inc. (NYSE: LYV) with 5.4 million shares worth more than $462 million.
In its Q4 2020 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Live Nation Entertainment, Inc. (NYSE: LYV) was one of them. Here is what the fund said:
“In 2006, we initiated our position in Live Nation, the global entertainment company that handles promotion, venue management and ticket sales for live events. Live Nation was spun out of the former Clear Channel Communications in late 2005. In our view, spinoffs often represent attractive opportunities because investors frequently undervalue the new company. We believed this was the case with Live Nation, especially given its initially small market capitalization. As well, when spinoffs are freed from their parents, they typically benefit from intensified management focus and more flexible capital allocation policies. In Live Nation’s case, the spinoff helped make possible the merger with Ticketmaster in 2010, which materially improved the business franchise. Although these factors alone might have made Live Nation a good holding for the Fund, an unexpected technology helped to boost the company’s fortunes: streaming. As the advantages of streaming convinced consumers to reduce or even eliminate their purchases of media, such as CDs and DVDs, artists began to tour more, thereby providing a tailwind to Live Nation’s operations. This accelerated growth in the company’s intrinsic value per share, which in turn generated numerous increases in our sell target for the holding, enabling us to continue to own the shares in the Fund for 14 years. We typically target a three- to five-year holding period for our equity investments, but we love opportunities like Live Nation, which achieve unanticipated intrinsic value growth.”
4. The Walt Disney Company (NYSE: DIS)
Number of Hedge Fund Holders: 134
The Walt Disney Company (NYSE: DIS) is placed fourth on our list of 10 stocks to buy to profit from post-COVID economic recovery. The company’s shares have returned 62% to investors in the past year. The firm, an entertainment and mass media conglomerate, was able to weather the COVID-19 impact better than competitors as it had an internet streaming platform, named Disney+, to offset some of the pandemic losses. As the economy reopens, and theme parks welcome visitors again, the company can benefit a lot from the increased activity.
On May 26, investment advisory maintained a Buy rating on The Walt Disney Company (NYSE: DIS) stock with a price target of $215, implying an upside potential of over 20%. UBS also named Disney among the high conviction picks with strong growth potential in the coming months.
At the end of the first quarter of 2021, 134 hedge funds in the database of Insider Monkey held stakes worth $12.5 billion in The Walt Disney Company (NYSE: DIS), down from 144 in the preceding quarter worth $16.4 billion.
In its Q4 2020 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE: DIS) was one of them. Here is what the fund said:
“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 all of usto our couches. Disney, however, wasready 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.”
3. Comcast Corporation (NASDAQ: CMCSA)
Number of Hedge Fund Holders: 88
Comcast Corporation (NASDAQ: CMCSA) is a telecommunications firm with significant stakes in the broadcast and entertainment businesses. It is ranked third on our list of 10 stocks to buy to profit from post-COVID economic recovery. The stock has returned 45% to investors in the past year. The firm recently launched the Peacock internet streaming platform which has already signed a deal with Amazon Fire TV for distribution. Comcast has a market capitalization of over $250 billion.
On April 20, investment advisory Oppenheimer upgraded Comcast Corporation (NASDAQ: CMCSA) stock to Outperform from Perform with a price target of $75 on the back of growth outlook for the firm as the COVID-19 pandemic waned.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Eagle Capital Management is a leading shareholder in Comcast Corporation (NASDAQ: CMCSA) with 38 million shares worth more than $2 billion.
In its Q1 2021 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Comcast Corporation (NASDAQ: CMCSA) was one of them. Here is what the fund said:
“Comcast is the Largest cable provider in the U.S. and is the dominant internet access provider in the markets it serves. Though Comcast will likely see further declines in cable subscriptions due to ongoing cord-cutting, it should be able to off set that lost revenue by growing internet access customers and instituting higher pricing. The pandemic has increased the importance of a fast internet connection, with more content streaming to homes at increasingly higher quality. Comcast made significant upgrades early on, allowing it to quickly deploy new technology and increase speeds to meet the evolving needs of its customers.”
2. Airbnb, Inc. (NASDAQ: ABNB)
Number of Hedge Fund Holders: 52
Airbnb, Inc. (NASDAQ: ABNB) is a vacation rental firm based in California. It only made its stock market debut late last year and could not fully capitalize on the promise it offered to investors as the COVID-19 restrictions prevented the company from registering noticeable growth. However, as the economy reopens, the firm can expect record growth. It is placed second on our list of 10 stocks to buy to profit from post-COVID economic recovery. The company’s shares have returned over 3% to investors in the past twelve months.
On May 27, investment advisory RBC Capital Markets gave Airbnb, Inc. (NASDAQ: ABNB) stock an Outperform rating and named it as one of the best players amid the hot demand trend for travel in the post-COVID economy.
At the end of the first quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in Airbnb, Inc. (NASDAQ: ABNB), down from 68 in the preceding quarter worth $1.6 billion.
In its Q4 2020 investor letter, Blue Hawk Investment Group, an asset management firm, highlighted a few stocks and Airbnb, Inc. (NASDAQ: ABNB) was one of them. Here is what the fund said:
“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 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.”
1. Hess Corporation (NYSE: HES)
Number of Hedge Fund Holders: 26
Hess Corporation (NYSE: HES) is a global energy company. It is ranked first on our list of 10 stocks to buy to profit from post-COVID economic recovery. The stock has returned 82% to investors in the past year. After a torrid 2020, with oil prices at record lows, the firm has bounced back as travel resumes and oil prices pick up again, with further growth expected as airlines resume operations and international borders reopen.
Hess Corporation (NYSE: HES) posted earnings for the first quarter of 2021 on April 8, reporting earnings per share of $0.82, beating market predictions by $0.47. The revenue over the period was close to $2 billion, up 40% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Hess Corporation (NYSE: HES) with 3.3 million shares worth more than $235 million.
In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Hess Corporation (NYSE: HES) was one of them. Here is what the fund said:
“We took a short position in Hess (HES) during the first quarter due to what we believed to be a weakness in their assertion that the Bakken would serve as a cash engine, along with their Gulf of Mexico assets, to pay for the development of their offshore Guyana fields. Our analysis suggested that not only was their fracking in the Bakken unprofitable but that it was unlikely ever to be so. The market very quickly told us that although we might be right in our analysis of the fundamentals, it did not care. We suspect that much of this has to do with the fact that Hess had hedged nearly 100% of their production in 2020 during the relatively high priced 2019 period, but we cannot be certain. Since we closed out the position, the stock has rallied a further 45%. We take this as directional evidence (perhaps) of a good decision. Hess contributed -0.19% to the portfolio during the quarter.
We have mostly avoided shorting oil companies in the last few years. The opportunity is appealing but extremely tricky to evaluate. Hess remains an interesting short. We have little confidence in the long-term viability of operations in the Bakken, and Hess remains a large player. Yet as the firm moves further along in their development and monetization of assets in Guyana, the weight of the Bakkens failure to play a meaningful role in producing positive free cash flow becomes increasingly difficult to determine by looking at the financials and perhaps less significant to the market. One thing that seems increasingly true of the environment we are investing in is that bad capital allocation by management teams can be easily forgiven if there is plenty of liquidity, even if access to liquid capital imperils long-term solvency.”
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