Summer is generally a quiet time in the markets. Institutional investors, generally speaking, take some time away. In fact, that’s where the idiom “Sell in May and Go Away” comes from.
But quiet doesn’t mean uneventful. The world still moves along even in the lazy months of summer. And at the moment, there are two conflicting views driving the market.
One is the fear that everything’s a bubble that is just about to burst. We don’t recommend you get out of stocks, but let’s face it, things are more than just a little frothy.
But there’s another view summarized by the acronym, YOLO (as in You Only Live Once). And these investors are committed to keeping the markets going higher. Even if it means going “all in” (whatever that means to them) on risky asset classes like NFTs or Dogecoin.
We sincerely hope you take time to recharge (whatever that means to you) this summer. Whatever your personal beliefs, the reopening of our economy is a moment that deserves to be celebrated by all of us. But before you do, we recommend that you take a peek at these seven stocks that you can consider adding to your portfolio before you check out for the summer. These are likely to get as hot as a firecracker on the Fourth of July and should have you smiling when the summer ends.
Quick Links
- Walt Disney Company
- Home Depot
- Cedar Fair
- Beyond Meat
- Penn National Gaming
- Boeing
- Winnebago Industries
#1 - Walt Disney Company (NYSE:DIS)
At some point, I’ll get tired of recommending the Walt Disney Company (NYSE:DIS) as a stock to buy. That day is not today. On a list of stocks that should avoid a summer sell-off, Disney is one of the first to come to mind.
From a technical standpoint, despite being up 44% in the trailing 12 months as of June 3, 2021, the path hasn’t always been true north for Disney. At many times during the pandemic, the bears briefly seized control. But my bullishness on Disney is not strictly from a technical standpoint.
Prior to the pandemic, my bullish outlook on Disney was on the whole being greater than the sum of its parts. During the pandemic the company’s streaming service, Disney+, carried a heavy load. Now it won’t have to carry the load by itself. And I imagine that investors will quickly begin to see the magic return to DIS stock including, perhaps, a reinstatement of the dividend that they suspended at the onset of the pandemic.
About Walt Disney
The Walt Disney Company operates as an entertainment company worldwide. It operates through three segments: Entertainment, Sports, and Experiences. The company produces and distributes film and television video streaming content under the ABC Television Network, Disney, Freeform, FX, Fox, National Geographic, and Star brand television channels, as well as ABC television stations and A+E television networks; and produces original content under the ABC Signature, Disney Branded Television, FX Productions, Lucasfilm, Marvel, National Geographic Studios, Pixar, Searchlight Pictures, Twentieth Century Studios, 20th Television, and Walt Disney Pictures banners.
Read More - Current Price
- $112.03
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $123.58 (10.3% Upside)
#2 - Home Depot (NYSE:HD)
Some may argue that the housing market is in a bubble. But if your sentiment towards Home Depot (NYSE:HD) is based on a belief that home building may slow down, you’re not seeing the whole picture.
Certainly, the home improvement giant is benefiting from strength on its commercial side. Contractors and builders were sidelined to an extent by Covid-19 restrictions. And now that they are back in business, there is some thought that the market for new construction and remodeling may slow down as lumber costs remain high.
But the pandemic showed that the American consumer finds a way. Whether it’s using laminate flooring or simply applying a fresh coat of paint, they’ll figure out cost-effective alternative to renovate their homes. And with its now proven omnichannel model, Home Depot is helping them get there.
If you need a less abstract case, consider the company’s recent earnings report in which it beat estimates on top and bottom lines for the fourth straight quarter. And you don’t have to drill down to see that they not only beat expectations, they crushed them. I expect more of the same this summer.
About Home Depot
The Home Depot, Inc operates as a home improvement retailer in the United States and internationally. It sells various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. The company also offers installation services for flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows.
Read More - Current Price
- $392.60
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $426.00 (8.5% Upside)
#3 - Cedar Fair (NYSE:FUN)
If you’re looking to add some fun (couldn’t resist) to your portfolio, you should consider Cedar Fair (NYSE:FUN). And the reason is that consumers are going to be looking to have some excitement this summer, and the company’s properties of amusement parks including Cedar Point and King’s Island in Ohio are prime candidates.
FUN stock is about 15% below its pre-pandemic high. That would put it at right about the 12.17% consensus price target set by analysts.
The proof will be in the performance. The company just got done reporting in what is typically its lightest quarter of the year. This year was particularly light. However it beat analysts’ expectations by over 50%.
Good news for investors may be less enjoyable for college students who make up a good chunk of the company’s labor force. Cedar Fair is adopting a Kronos-based workforce management solution to help optimize seasonal labor costs which total approximately 30% of the company’s operating costs.
About Cedar Fair
Cedar Fair, L.P. owns and operates amusement and water parks, as well as complementary resort facilities. Its amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott's Berry Farm near Los Angeles, California; Canada's Wonderland near Toronto, Ontario; Kings Island near Cincinnati, Ohio; Carowinds in Charlotte, North Carolina; Kings Dominion situated near Richmond, Virginia; California's Great America located in Santa Clara, California; Dorney Park in Pennsylvania; Worlds of Fun located in Kansas City, Missouri; Valleyfair situated near Minneapolis/St.
Read More - Current Price
- $48.64
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $56.07 (15.3% Upside)
#4 - Beyond Meat (NASDAQ:BYND)
Beyond Meat (NASDAQ:BYND) has only been a publicly-traded stock for a little over two years. But looking at the company’s stock chart could easily be confused with being on one of the roller coasters at a Cedar Fair property.
The plant-based movement is real. And yet has not quite lived up to the hype. But as a short-term summer stock, I can make a case for Beyond Meat. The global meat industry is just recovering from a ransomware attack on JBS (OTCMKTS:JBSAY), the Brazil-based meat processing giant. BYND stock got a nice spike on that news. However, that’s not the real story.
The fact is meat prices have been climbing throughout the pandemic. The strain on supply chains as businesses reopen, high commodity prices, and labor shortages after prolonged Covid-19 shutdowns are just a few reasons for the higher prices. But whatever the reason, the door is open for consumers to give Beyond Meat a chance.
Analysts believe BYND stock is overvalued. And without the current strain on meat supply, I would likely be right there with them. But this is not about forever stocks, it’s about “for now” stocks. And in that context, Beyond Meat has a chance to do special things.
About Beyond Meat
Beyond Meat, Inc, a plant-based meat company, develops, manufactures, markets, and sells plant-based meat products in the United States and internationally. The company sells a range of plant-based meat products across the platforms of beef, pork, and poultry. It sells its products through grocery, mass merchandiser, club stores, and natural retailer channels, as well as various food-away-from-home channels, including restaurants, foodservice outlets, and schools.
Read More - Current Price
- $3.55
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 3 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $5.50 (54.9% Upside)
#5 - Penn National Gaming (NASDAQ:PENN)
Online gaming was a high-growth sector during the pandemic. However, as the economy began its tepid reopening last summer, the demand to go to casinos was real. That dynamic should prove to be a catalyst for Penn National Gaming (NASDAQ:PENN). The company has an asset-light approach to its properties. While that was a drag at the onset of the pandemic, it should work to the company’s advantage in the recovery.
Penn National has a partnership with Barstool Sports in 2020. When the online sports betting app launched in Pennsylvania, consumers wagered $11 million in the first week.
PENN stock soared after last November’s election as an increasing number of states either passed ballot initiatives or announced future ballot initiatives to legalize online gaming.
But like many things, the reality is setting for investors. And while some large states are now on board with online gambling, the rollout may not be as soon as expected. That’s actually good for PENN stock. It’s taken a bit of a haircut since February and not it appears to be a much more attractive buy heading into summer.
About PENN Entertainment
PENN Entertainment, Inc, together with its subsidiaries, provides integrated entertainment, sports content, and casino gaming experiences. The company operates through five segments: Northeast, South, West, Midwest, and Interactive. It operates online sports betting in various jurisdictions; and iCasino under Hollywood Casino, L'Auberge, ESPN BET, and theScore Bet Sportsbook and Casino brands.
Read More - Current Price
- $18.62
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $23.53 (26.4% Upside)
#6 - Boeing (NYSE:BA)
The global pandemic was challenging for the airline industry but must have been an absolute to Boeing (NYSE:BA). The company struggled through 2019 battered by difficulties in getting its 737-Max Jet approved after it was implicated in two separate crashes.
So when the stock dropped 70% at the onset of the pandemic, it took nerves of steel to continue to hold BA stock. I like how MarketBeat’s Sam Quirke described Boeing as a stock that many investors will view as “the one that got away.” But it’s hard to blame investors for getting anxious about holding BA stock when it was a falling knife.
However, with airline traffic getting stronger by the day, analysts are seeing a pass-through effect to Boeing and by extension BA stock.
The company continues to be burning through a significant amount of cash. And recovery to Boeing’s balance sheet won’t happen overnight. But with the stock more than 37% below its high of over $400 a share, this looks like a good entry point.
About Boeing
The Boeing Company, together with its subsidiaries, designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company operates through Commercial Airplanes; Defense, Space & Security; and Global Services segments.
Read More - Current Price
- $177.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $190.11 (7.2% Upside)
#7 - Winnebago Industries (NYSE:WGO)
The ingenuity and resolve of the American consumer were on full display during last summer’s socially distanced summer. I’m referring to the increased demand for recreational vehicles (RVs) to hit the open road. And one of the largest beneficiaries was Winnebago Industries (NYSE:WGO).
And even as the ranks of the vaccinated increases, many Americans lately choose an RV as their transportation of choice. To be fair, the RV industry is not immune to the impact of the global chip shortage. However, the industry has dealt with supply chain shortages in the past and may be better prepared to handle any obstacles. Investors should pay attention to any remarks the company makes when it releases earnings at the end of June.
And with shares about 20% down from their March high, WGO stock is presenting itself as a nice buy-the-dip opportunity. Analysts agree as they have a price target that has the stock climbing over 11%.
About Winnebago Industries
Winnebago Industries, Inc manufactures and sells recreation vehicles and marine products primarily for use in leisure travel and outdoor recreation activities. The company operates through three segments: Towable RV, Motorhome RV, and Marine. It provides towable products that are non-motorized vehicles to be towed by automobiles, pickup trucks, SUVs, or vans for use as temporary living quarters for recreational travel, such as conventional travel trailers, fifth wheels, folding camper trailers, and truck campers under the Winnebago and Grand Design brand names.
Read More - Current Price
- $49.98
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $68.13 (36.3% Upside)
One thing is fairly certain. It’s not going to be a boring summer. The economy and stock markets continue to show a high degree of volatility. And with America reopening, by the time those institutional investors check back in after Labor Day, we’ll have a pretty good idea of where those pent-up savings dollars were allocated.
We don’t pretend to have a crystal ball, but we believe that these seven stocks will be ideal barometers for the disposable consumer dollars that will be unleashed in the economy.
Of course, macroeconomic events can upset things. Inflation is becoming more difficult to ignore. And the global chip shortage is only one reason that supply chain disruptions are likely through the end of the year.
But you should never bet against the American consumer. Even during the pandemic, consumers showed an ability to adapt their shopping habits. It’s hard to see them sitting on the sidelines now.
That’s why you really need to consider adding one or more of the stocks in this presentation to your portfolio. They’re leaning in to where the consumer is going, and are primed to take you on a profitable ride.
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