3 Vacation Stocks to Buy Ahead of Summer

Friday, May 28, 2021 | Sean Sechler
3 Vacation Stocks to Buy Ahead of SummerIt’s safe to say that summer 2021 might be the busiest season of all time for companies in the vacation industry. With tons of pent-up demand thanks to the fact that people have been stuck at home for the better part of the last year, there’s no telling just how much profits companies that are involved in providing vacation experiences will rake in this summer. While many companies in the tourism, travel, and vacation industry suffered throughout 2020, things are certainly looking up for them as we head into the peak vacation months.

A lot of the vacation stocks have already rallied on optimism that vaccines would result in a rebound for their businesses, but that doesn’t mean they don’t have more upside. That’s why it makes sense to start looking at the best vacation stocks to buy ahead of summer, as many of these companies will report earnings results next quarter that include summer revenues. Let’s take a deeper look below.

Walt Disney Co (NYSE:DIS)

The story surrounding Walt Disney Co has shifted over the last few years, as the company focused more on developing its media and direct-to-consumer businesses. The company’s Disney+ streaming platform has been a big success, and the fact that Disney owns some of the most well-known film, television, and home video businesses under the Walt Disney, Twentieth Century Fox, Marvel, Lucasfilm, Pixar, and Fox Searchlight names bodes well for the streaming platform's future. However, there’s a good chance that investors are undervaluing the company’s parks, experiences, and products segment which should see a huge rebound as vacationers head out for some rest & relaxation this summer.

The company’s CEO, Bob Chapek, recently provided some clarification about capacity increases at parks like Walt Disney World which should be viewed as a positive. Mr. Chapek expects to see Disney parks nearing full capacity by fall, and the company’s international theme parks are also starting to reopen including Disneyland Paris. Keep in mind that Disney also runs cruise lines that could be back operating as soon as late June, which would also provide an immediate boost to the company’s earnings. Don’t underestimate the powerful pent-up demand for this company’s vacation experiences, as the house of mouse could be back with a vengeance this summer.

Southwest Airlines (NYSE:LUV)

Navigating the commercial airline stocks is a difficult endeavor at the moment, thanks to the fact that most companies have had to take on a lot of debt to make it through the dramatic drops in air traffic that occurred last year. However, Southwest Airlines stands out as a solid option because it has one of the industry’s strongest balance sheets and has actually improved its debt position during the pandemic. The company had $1.6 billion in negative net debt as of March 2021, which is impressive given the difficult circumstances that these companies faced last year.

As the fourth-largest U.S. airline, Southwest will certainly be busy this summer as people head out to their favorite vacation destinations. As COVID cases continue to decline, it’s fair to assume that more people will be comfortable traveling on planes. Keep in mind that Southwest tends to focus on leisure travelers, which could benefit the company in the near term as people seek vacation time. It’s also very likely to be one of the only airlines that can turn a profit this year, which says a lot about its operating efficiency. While the company might face some turbulence in terms of getting pricing back to pre-pandemic levels, it’s still a great vacation stock to consider adding if you want to own an airline.

Airbnb (NASDAQ:ABNB)

Airbnb was one of the most eagerly-anticipated IPOs of 2020, yet the stock has been a major underperformer in 2021. That doesn’t change the fact that it's one of the best vacation stocks to consider buying ahead of the summer, especially since the stock is currently trading around its lows of the year. If you aren’t familiar with Airbnb, it’s a company that operates a platform that connects hosts and guests online to book spaces and experiences. It’s an interesting alternative to booking a hotel, as you can often find places to stay that are more unique and affordable on Airbnb’s platform.

The company has been resilient during the pandemic and recently reported Q1 earnings that confirm that travelers are starting to feel comfortable with hitting the road again. Airbnb saw its Q1 revenue increase by 5% year-over-year to reach $887 million, which even exceeded Q1 2019 levels. While this is a stock that can be quite volatile, Airbnb has an intriguing business model and offers a great way to play the recovery in the vacation industry at this time.

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7 Bellwether Stocks Signaling a Return to Normal

Bellwether stocks are considered to be leading indicators about the direction of the overall economy, a specific sector, or the broader market. They are predictive stocks in that investors can use the company’s earnings reports to gauge economic strength or weakness.

The traditional definition of bellwether stocks brings to mind established, blue-chip companies. They are the home of mature brands with consumer loyalty. These may be stocks that aren’t associated with exceptional growth; some may be dividend stocks.

But there’s something different about normal this time around. If it’s true (and I think it is) that the old rules no longer apply, investors need to change the way they think about bellwether stocks. Plus, let’s face it, many stocks that we might consider to be bellwether stocks have already had a bit of a vaccine rally. That means that the easy gains are gone.

With that in mind, we’ve put together this special presentation that highlights seven of what may be termed the new bellwether stocks. These are stocks that investors should be paying attention to as the economy continues to reopen.

One quality of many of these stocks is that they are either negative for 2021 or underperforming the broader market. And that means that they are likely to have a strong upside as the economy grows.

View the "7 Bellwether Stocks Signaling a Return to Normal".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
The Walt Disney (DIS)1.8$172.42flatN/A-68.97Buy$195.57
Southwest Airlines (LUV)1.7$55.19flatN/A-11.17Buy$61.26
Airbnb (ABNB)1.2$152.52flatN/A-9.82Hold$170.33
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