In this article, we discuss the 11 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. 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. 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. 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. 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. 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., with more than 18.4 million shares worth $3.82 billion.
Broyhill Asset Management, an investment firm, discussed Avis Budget Group, Inc. 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., The Walt Disney Company, and Airbnb, Inc., Avis Budget Group, Inc. 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. getting extra attention as people finally find the freedom to head outdoors for adventures.
DA Davidson analyst Brandon Rolle sees Winnebago Industries, Inc. 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., 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. 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. 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.. 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. 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. 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 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 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 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 in Q4 2021, with aggregate stakes worth $1.39 billion.
Wasatch Global Investors, an investment firm, talked about Pool Corporation 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. 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. have increased 16.51% in the last 12 months.
Investors were seen piling into SeaWorld Entertainment, Inc.. 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. 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 shares to $55 from $63.
For the fourth quarter of 2021, Six Flags Entertainment Corporation 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 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 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., The Walt Disney Company, and Airbnb, Inc., Six Flags Entertainment Corporation is one of the best summer stocks to buy now.
5. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 47
The increase in consumer activity in the summer months is powered by commercial jets flying millions of people to their destinations, and Delta Air Lines, Inc. stands to benefit as one of the most prominent airlines in the United States. It boasts many international routes, as well as hubs in many big cities around the globe.
JPMorgan analyst Jamie Baker on April 22 raised the firm’s price target on Delta Air Lines, Inc. to $70 from $69 and maintained an ‘Overweight’ rating on the company shares. He notes that shares in the airline sector are still 20% below 2021 highs; and apart from fuel and geopolitical tensions, the analyst sees every fundamental input as stronger than last year.
Surging travel demand allowed Delta Air Lines, Inc. to garner $9.35 billion in revenue for the first quarter of 2022, beating estimates by $312.5 million and signaling a boost of 125.25% year-on-year. EPS was recorded at -$1.23, also outperforming estimates by $0.04.
47 hedge funds were long Delta Air Lines, Inc. at the close of the fourth quarter, with aggregate stakes worth $1.14 billion. Lansdowne Partners held a $174 million stake in Delta at the end of the fourth quarter, making it the largest shareholder of the firm.
Miller Value Partners, an investment firm, mentioned many stocks in its Q4 2021 investor letter, and Delta Air Lines, Inc. was one of them. The fund said:
“We’ve healed greatly from the worst days of the pandemic, and we expect that to continue going forward. We see the greatest disconnects between current market expectations and 18-months-out fundamentals in names like Delta Airlines (DAL).
Delta is a quality airline with shareholder-friendly management. It was the only one not to issue equity during the pandemic. It was also the only profitable airline in the second half of 2021. It generated positive operating cash flow despite business and international travel weakness. When earnings finally normalize, which the company doesn’t expect until 2024, it should earn more than $7/share. After bouncing significantly off the lows, DAL currently trades at $41.99 or less than 6x those earnings.
We’ve believed for over a decade that the US airlines are better businesses than they’ve historically been. Consolidation led to a more rational industry. These companies shifted from growth at any cost to a return on capital mindset, the importance of which can’t be understated. We previously believed a recession would finally demonstrate the group’s improved resilience.
Unfortunately, a global pandemic did exactly the opposite. Buffett, who bought the airlines after being a critic of their historical capital destruction, sold his airlines early in the pandemic due to the risk. The government offered support to the industry due to their national strategic importance, which we believe offers protection against another worst-case scenario. We still believe Delta is a better business than the market gives it credit for and one whose prospects will be materially different 18 months from now. As patient investors, you can expect us to hold tight.”
4. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 63
Airbnb, Inc. is up next on our list of the best summer stocks to buy. As global tourism picks up again, the firm enjoys the spotlight as a platform which connects homeowners willing to rent out their properties to tourists in more than 191 countries around the world.
On May 5, Susquehanna analyst Shyam Patil maintained a ‘Positive’ rating on Airbnb, Inc. shares, and lowered the price target to $190 from $235. The analyst noted that the hospitality firm enjoyed a strong quarter and looks set to carry its momentum into the peak summer season. He sees the stock as a must-have given its strong positioning, promising long-term opportunity, and profitability improvements.
In Q1 2022, Airbnb, Inc. reported EPS of -$0.01, which outperformed estimates by $0.22. The company raked in $1.51 billion in revenue for the quarter, growing 70.13% year-on-year and beating estimates by $56.5 million.
As of the fourth quarter, 63 out of 924 elite hedge funds tracked by Insider Monkey held stakes in Airbnb, Inc. worth $2.97 billion. This shows growing investor confidence over the previous quarter where 58 hedge funds held $2.71 billion worth of positions in the company. Jim Simons’ Renaissance Technologies was the most prominent shareholder of Airbnb, Inc. in the fourth quarter of 2021, with 3.58 million shares worth more than $597 million.
Here is what Tollymore Investment Partners had to say about Airbnb, Inc. in its Q3 2021 investor letter:
“Today disruptors are not typically seeking to replace incumbents entirely. Rather, they break the links in the customer journey, in doing so better aligning monetisation with value creation and minimising externalities. For example, Airbnb broke the link between staying in residential property and owning it. Airbnb is a specific example of a business model innovation which separated asset use from ownership. This is hardly a novel idea; it’s called renting. Rental models lend themselves to assets which are expensive and durable, and where usage is infrequent.”
3. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 82
Expedia Group, Inc. (NASDAQ:EXPE) is one of the world’s largest online travel companies with operations in more than 200 countries around the globe under its brands; Expedia.com and Hotels.com.
On May 3, Benchmark analyst Daniel Kurnos reiterated a ‘Buy’ rating on Expedia Group, Inc. shares and increased the price target to $275 from $265. He noted that the firm posted in-line Q1 results despite another shortfall in bookings, whilst noting that the recovery narrative in the travel industry has continued largely unabated. The analyst raised his 2023 EBITDA estimate for the firm by roughly $40 million and now sees incremental upside to revenue despite a modest outlook on bookings.
The company released its first quarter earnings on May 2, where EPS was reported at -$0.47, beating estimates by $0.01. Quarterly revenue of $2.25 billion was an increase of 80.5% year-on-year.
Hedge fund sentiment was positive on Expedia Group, Inc. at the close of the fourth quarter, where 82 hedge funds reported long bets on the company shares. This is up from 78 hedge funds a quarter ago. Daniel Sundheim’s D1 Capital Partners held a $2.29 billion stake in Expedia Group, Inc. at the end of the fourth quarter, making it the firm’s biggest shareholder.
Heartland Advisors, an investment firm, talked about Expedia Group, Inc. in its Q4 2021 investor letter, stating:
“The run-up in equity prices over the past year and a half has narrowed the pool of attractively valued businesses. Economically sensitive areas of the market, in particular, have seen valuations stretched—but the impact of investor exuberance is evident in share prices of companies throughout the broader market. In our view, the elevated valuations commanded by many stocks have heightened risks and dampened upside potential.
In response to this backdrop, we continue to focus on finding and owning companies that are poised to succeed against a variety of backdrops or those that are priced at significant discounts to peers regardless of the sector or industry. Recent addition Expedia Group, Inc. (EXPE) is an example of the type of business we’ve found attractive.”
2. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 92
Booking Holdings Inc. (NASDAQ:BKNG) is a tourism and accommodation company which operates Booking.com and Rentalcars.com. Millions of users rely on these platforms to make their travel arrangements around the globe, and it is why Booking Holdings Inc. is one of the best stocks to buy this summer.
Citi analyst Ronald Josey on May 5 maintained a ‘Buy’ rating on Booking Holdings Inc. shares and raised the price target to $2,800 from $2,600. Josey sees the firm gaining share of the resurgent global travel market, with booking windows lengthening, gross bookings reaching record levels in April, and room nights returning to growth relative to 2019 — all within a strong overall demand in the travel industry.
Reporting its first quarter earnings on May 4, Booking Holdings Inc. reported an EPS of $3.90, beating estimates by $2.56. Revenue for the quarter was recorded at $2.7 billion, up $167.2 million from analysts’ estimates and increasing 136.2% year-on-year.
The most prominent shareholder of Booking Holdings Inc. at the end of the fourth quarter was Harris Associates, which held a stake consisting of roughly 669,000 shares worth $1.6 billion. In total, 92 hedge funds were long on the company shares at the close of Q4 2021, with a combined value of $7.7 billion.
1. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 111
The Walt Disney Company is an entertainment conglomerate which operates a global network of theme parks. As the world returns to pre-pandemic normalcy, shares of The Walt Disney Company stand to benefit as one of the most premium entertainment destinations for tourists around the world.
Rosenblatt analyst Barton Crockett on April 19 initiated coverage of The Walt Disney Company with a ‘Buy’ rating and a $177 price target. He notes the firm’s theme parks are enjoying the “strongest demand ever”, and sees the resumption of international travel and Disney’s cruise ships as catalysts in the near future driving further growth for the firm.
For the fourth quarter, The Walt Disney Company posted an EPS of $1.06, beating estimates by $0.44. Revenue of $21.8 billion for the quarter was $943.3 million above analysts’ estimates, and recorded a jump of 34.28% year-on-year.
Investors were seen piling into The Walt Disney Company. At the end of the fourth quarter, 111 hedge funds held stakes in the company, as compared to 101 hedge funds a quarter ago. Coatue Management was the largest shareholder of The Walt Disney Company in Q4 2021, with a stake worth more than $897 million.
Investment firm ClearBridge Investments talked about The Walt Disney Company in its Q4 2021 investor letter. Here’s what the fund said:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. Disney announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. Disney has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
You can also take a look at 10 Best Bank Stocks To Buy Now and 10 Best Education Stocks To Buy Now
