12 Best Summer Stocks To Buy Now

Published on August 4, 2023 at 11:49 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best summer stocks to buy. If you want to skip our detailed discussion about the seasonal impact on the stock market, head directly to 5 Best Summer Stocks To Buy Now.

While the temperature rises and students get geared up for their much awaited summer break, investors get to work. One of the best performing seasonal sectors in 2023 is hospitality and tourism. Mastercard Economics Institute reported that global leisure and business travel experienced a year-over-year growth rate of 42% between 2022 and 2023. For the first three months of 2023, in the UAE alone, leisure activities have increased by roughly 50%, as compared to the same period in 2022. In addition to this, the travel and entertainment spending by small businesses has increased by 49% in the MENA region as well. As per the 2023 Economic Impact Research by The World Travel & Tourism Council, the global tourism industry is expected to reach $9.5 trillion. This industry had seen a sharp decline during the pandemic. While things have been improving ever since, the tourism sector is set to skyrocket. The World Travel & Tourism Council expects that approximately 50% of all countries will have achieved complete economic recovery to pre-pandemic levels or will be very close, with a 95% recovery rate, by the conclusion of 2023.

Don’t Miss: 12 Cheap Travel Stocks to Buy Now

As summer break kicks in and families/students look to travel and unwind, online booking portals, major airline carriers, and the hotel industry are expected to see an increase in sales and revenue. Companies such as Booking.com and Airbnb.com have seen unprecedented levels of online booking reservations. As per Ernst & Young, consumer surveys indicate that a majority of people plan to take leisure trips in the next six months despite rising inflation, indicating strong demand for travel. Group business travel is also expected to have a robust year, with an increase in convention center bookings. Corporate travel budgets are likely to recover to roughly pre-pandemic levels, with many companies adopting hybrid remote/office approaches. China, which was the largest outbound travel market before the pandemic, is expected to resume travel in 2023. Additionally, the passing of the Infrastructure Investment and Jobs Act in the US is forecasted to result in increased spending on hotels. As a result of these trends, digital nomads may become more mobile, choosing to work from places they wish to travel to.

Also Read: Top 15 Luxury Travel Agencies in the World

The industry for leisure and recreation is on the rise as well. ResearchAndMarkets.com reported that in 2022, the worldwide leisure travel market was valued at $804.4 billion. The market is projected to reach $1,330.5 billion by 2028, demonstrating a compound annual growth rate (CAGR) of 8.75% during the period from 2022 to 2028. According to The Business Research Company’s findings, the global amusement parks market expanded from $67.16 billion in 2022 to $106.57 billion in 2023, indicating a whopping compound annual growth rate (CAGR) of 58.7%. Looking ahead, the market is projected to further grow to $122.5 billion by 2027, with an expected CAGR of 3.5%.

Investors seeking to diversify their portfolios and benefit from the growth opportunity that lies in the seasonal impact of summer can check out stocks like Hilton Worldwide Holdings Inc. (NYSE:HLT), Booking Holdings Inc. (NASDAQ:BKNG), and the Walt Disney Company (NYSE:DIS).

Photo by Tommaso Pecchioli on Unsplash

Our Methodology

For this list, we have taken the following sectors into consideration – travel and tourism, hospitality, solar, consumer foods, and entertainment. This is because these sectors are highly prone to seasonal market impact. We selected the following summer stocks based on hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund investors in each firm.

Best Summer Stocks To Buy Now

12. Topgolf Callaway Brands Corp. (NYSE:MODG)

Number of Hedge Fund Holders: 32

Topgolf Callaway Brands Corp. (NYSE:MODG) is a global leader in the golfing industry. The company designs and manufactures golf equipment, apparel, and other related accessories. Topgolf Callaway Brands Corp. (NYSE:MODG) has a strong international presence with operations in the United States, Europe, and Asia. The company has three major segments – Topgolf, Golf Equipment, and Active Lifestyle. On May 9, Topgolf Callaway Brands Corp. (NYSE:MODG) announced a Q1 non-GAAP EPS of $0.17 and a revenue of $1.17 billion, outperforming Wall Street estimates by $0.02 and $30 million, respectively. With the summer season, recreational activities tend to rise and Topgolf venues are likely to see an increase in demand.

According to Insider Monkey’s first quarter database, a total of 32 hedge funds were bullish on Topgolf Callaway Brands Corp. (NYSE:MODG), as opposed to 37 in the previous quarter. James Parsons’ Junto Capital Management held the largest stake in the company, with 1.6 million shares worth $34.7 million.

In addition to Topgolf Callaway Brands Corp. (NYSE:MODG), Hilton Worldwide Holdings Inc. (NYSE:HLT), Booking Holdings Inc. (NASDAQ:BKNG), and the Walt Disney Company (NYSE:DIS) are some of the best summer stocks to buy now.

Bernzott Capital Advisors said this about Topgolf Callaway Brands Corp. (NYSE:MODG) in its second quarter 2023 investor letter:

“Consumer Discretionary hurts relative results modestly. Topgolf Callaway Brands Corp. (NYSE:MODG) fell -8.1% as spending from corporate outings cooled a bit at its venues. The company continues to open new Topgolf locations to capitalize on golf’s popularity.”

11. First Solar, Inc. (NASDAQ:FSLR)

Number of Hedge Fund Holders: 39

First Solar, Inc. (NASDAQ:FSLR) is a global provider for photo-voltaic systems in regions such as Europe, Japan, India, and the United States. Demand for solar stocks rises exponentially in the summer, given the potential for higher units of electricity generation. On July 27, First Solar, Inc. (NASDAQ:FSLR) reported a Q2 GAAP EPS of $1.59 and a revenue of $811 million, outperforming Wall Street estimates by $0.65 and $91.59 million, respectively.

According to Insider Monkey’s first quarter database, 39 hedge funds were bullish on First Solar, Inc. (NASDAQ:FSLR), compared to 44 hedge funds in the last quarter. Robert Pohly’s Samlyn Capital held a significant position in the company, with 558,868 shares valued at $121.5 million.

10. General Mills, Inc. (NYSE:GIS)

Number of Hedge Fund Holders: 39

General Mills, Inc. (NYSE:GIS) manufactures consumer food products such as breakfast cereals, baking products, frozen pizzas, and snacks. The company also manages the ice cream brand Häagen-Dazs. The demand for ice-cream follows a seasonal trend and General Mills, Inc. (NYSE:GIS) is well positioned to capitalize on this, making it one of the best summer stocks. Häagen-Dazs enjoys a global presence in Europe, Asia, and the Middle East. On June 28, General Mills, Inc. (NYSE:GIS) declared a $0.59 per share quarterly dividend, a 9.3% increase from prior its dividend of $0.54. The dividend was paid to shareholders on August 1.

According to Insider Monkey’s first quarter database, a total of 39 hedge funds were bullish on General Mills, Inc. (NYSE:GIS), in contrast to the previous quarter, when 40 hedge funds held the stock. Ray Dalio’s Bridgewater Associates held the largest position in the company, with 1.2 million shares worth $102 million.

This is what Chartwell Investment Partners commented on General Mills, Inc. (NYSE:GIS) in its Q2 2022 investor letter:

“In the Dividend Equity accounts, the three best performers in Q2 include General Mills (NYSE:GIS, 3.2%), up 12.2%. General Mills benefitted from the combination of being in a very defensive industry as well as demonstrating solid business momentum; margins have been particularly impressive, following price increases.”

9. Pool Corporation (NASDAQ:POOL)

Number of Hedge Fund Holders: 41

Pool Corporation (NASDAQ:POOL) is a global provider of pool systems, related equipment, and accessories. The company also undertakes projects for the construction and renovation for pools, both indoor and outdoor. Swimming activities rapidly increase during the summer season and this results in an increase in demand for related products and solutions. On July 26, Pool Corporation (NASDAQ:POOL) declared a $1.10 per share quarterly dividend, in line with previous. The dividend is payable on August 24, to shareholders of record as of August 10.

According to Insider Monkey’s first quarter database, 41 hedge funds were bullish on Pool Corporation (NASDAQ:POOL). This number increased from the last quarter where 37 hedge funds were invested in Pool Corporation (NASDAQ:POOL).

TimesSquare U.S. Mid Cap Growth Strategy stated this about Pool Corporation (NASDAQ:POOL) in its Q4 2022 investor letter:

“Turning to detractors, Pool Corporation (NASDAQ:POOL) is a wholesale distributor of swimming pool supplies, equipment, and related leisure products. For the third quarter, Pool experienced steady growth in maintenance, repair, and renovation. That offset weaker new pool construction. Nevertheless, Pool’s shares dipped by -5% on this report given market concerns on housing and any housing-adjacent companies as interest rates rose.”

8. Six Flags Entertainment Corporation (NYSE:SIX)

Number of Hedge Fund Holders: 44

Six Flags Entertainment Corporation (NYSE:SIX) operates recreation parks in Canada, Mexico, and the United States. Be it rides, themed activities, or restaurants, the company offers the perfect family getaway. During the summer season, theme parks are a key attraction for families. This makes Six Flags Entertainment Corporation (NYSE:SIX) one of the best summer stocks to invest in. On May 8, Six Flags Entertainment Corporation (NYSE:SIX) reported a Q1 GAAP EPS of -$0.84 and a revenue of $142 million, outperforming Wall Street estimates by $0.01 and $8.51 million, respectively.

According to Insider Monkey’s first quarter database, 44 hedge funds held a bullish position in Six Flags Entertainment Corporation (NYSE:SIX). In contrast, 40 hedge funds were bullish on the stock during the previous quarter. Rehan Jaffer’s H Partners Management held the largest position in the company, with 11.4 million shares worth $304.5 million.

ClearBridge Investments Mid Cap Strategy had the following to say about Six Flags Entertainment Corporation (NYSE:SIX) in its Q3 2022 investor letter:

“We exited our position in theme park operator Six Flags Entertainment (NYSE:SIX) during the quarter. While we continue to believe that Six Flags’ new CEO is on the right path in directing assets and efforts towards greater premiumization of the parks, the lingering legacy of COVID-19 and a highly inflationary environment present formidable headwinds to these efforts.”

7. MGM Resorts International (NYSE:MGM)

Number of Hedge Fund Holders: 54

MGM Resorts International (NYSE:MGM) owns a number of recreation venues such as resorts, casinos, and hotels in the United States and Macau. The company has three segments – Las Vegas Strip Resorts, Regional Operations, and MGM China. On August 2, MGM Resorts International (NYSE:MGM) reported a Q2 non-GAAP EPS of $0.59 and a revenue of $3.94 billion, outperforming Wall Street estimates by $0.07 and $140 million, respectively. MGM Resorts International (NYSE:MGM) is one of the best summer stocks to buy.

According to Insider Monkey’s first quarter database, 54 hedge funds were bullish on MGM Resorts International (NYSE:MGM), compared to 48 funds in the previous quarter. Keith Meister’s Corvex Capital held the biggest position in MGM Resorts International (NYSE:MGM), with over 6.6 million shares worth $296.4 million.

Cove Street Capital had this to say about MGM Resorts International (NYSE:MGM) in its second quarter 2023 investor letter:

“As CEO Joey Levin pointed out in his Q1 quarterly letter, IAC traded at an enterprise value below its 18% stake in MGM Resorts International (NYSE:MGM) and 85% position in Angi (Ticker; ANGI)…meaning you effectively “get” 31% of Turo, the equity of publishing giant DotDash Meredith, Care.com, Vivian Health, and other IAC companies for “free”. MGM is seeing continued strength at its Vegas properties and now has the tailwind of China’s domestic re-opening for its Macau properties. This is one of our largest positions, and we remain confident in this portfolio of businesses and IAC’s ability to allocate capital.”

6. Delta Air Lines, Inc. (NYSE:DAL)

Number of Hedge Fund Holders: 56

Delta Air Lines, Inc. (NYSE:DAL) offers commercial and cargo air travel. The company’s operations are divided under two segments – Airline and Refinery. The summer season sees an increase in travel and tourism, and Delta Air Lines, Inc. (NYSE:DAL) is a household name in the American airline industry. On July 19, the company reported a Q2 EPS of $5.03 and a revenue of $14.18 billion, outperforming Wall Street estimates by $0.97 and $251.59 million, respectively.

According to Insider Monkey’s first quarter database, a total of 56 hedge funds were bullish on Delta Air Lines, Inc. (NYSE:DAL), as opposed to 51 funds in the previous quarter. Thomas E. Claugus’ GMT Capital held the largest position in the company, with over 6.2 million shares worth $217 million.

Like Hilton Worldwide Holdings Inc. (NYSE:HLT), Booking Holdings Inc. (NASDAQ:BKNG), and the Walt Disney Company (NYSE:DIS), Delta Air Lines, Inc. (NYSE:DAL) is one of the best summer stocks to invest in.

Miller Value Partners specifically said this about Delta Air Lines, Inc. (NYSE:DAL) in its Q3 2022 investor letter:

“Delta Air Lines, Inc. (NYSE:DAL) ($29.42) is a high-quality airline (yes, there really is such a thing!). It didn’t issue any equity in the pandemic. It focuses on delivering a superb customer experience and has brand loyalty (including a stable revenue stream from partner American Express, growing at 20%/ year). Maybe the best evidence: it’s managed to outperform the S&P 500 over the past decade despite a horrible pandemic ending point (+13.2% vs. 11.7%1 ). It trades for 4x 2024 earnings! If it eventually trades at Southwest’s historical valuation, it implies this stock should double as well.”

Click to continue reading and see 5 Best Summer Stocks To Buy Now.

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Published on May 1, 2024 at by Inan Dogan, PhD

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Published on May 2, 2024 at by Insider Monkey Staff

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