In this article, we talk about the 5 best summer stocks to buy now. In order to read our detailed analysis of these stocks and the latest market situation, go directly to 11 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. (NYSE:DAL) 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. (NYSE:DAL) 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. (NYSE:DAL) 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. (NYSE:DAL) 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. (NYSE:DAL) 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. (NASDAQ:ABNB) 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. (NASDAQ:ABNB) 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. (NASDAQ:ABNB) 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. (NASDAQ:ABNB) 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. (NASDAQ:ABNB) 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. (NASDAQ:ABNB) 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. (NASDAQ:EXPE) 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. (NASDAQ:EXPE) 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. (NASDAQ:EXPE) at the end of the fourth quarter, making it the firm’s biggest shareholder.
Heartland Advisors, an investment firm, talked about Expedia Group, Inc. (NASDAQ:EXPE) 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. (NASDAQ:BKNG) 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. (NASDAQ:BKNG) 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. (NASDAQ:BKNG) 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. (NASDAQ:BKNG) 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 (NYSE:DIS) 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 (NYSE:DIS) 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 (NYSE:DIS) 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 (NYSE:DIS) 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 (NYSE:DIS). 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 (NYSE:DIS) in Q4 2021, with a stake worth more than $897 million.
Investment firm ClearBridge Investments talked about The Walt Disney Company (NYSE:DIS) 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.”
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