We’ve just reached the summer solstice, and that means the longest day of the year and the official start of summer. Now for some, summer is a time for relaxation and vacations, but for me, it just means it’s time to look around for red-hot summer stocks. In this tumultuous year, good stocks aren’t the easiest to come by, but with a little digging in the sand we can stake out a few fantastic positions on the equity beach.
This summer, I want to own stocks that are immune from a slowing economy. That means I want to own companies whose earnings come from customers with plenty of expendable income. I’m also looking for the best-of-breed stocks within their particular industry, as these usually give investors the best chance to take advantage of favorable conditions within that particular market. Here are three of my favorite red-hot summer stocks that can give your portfolio a glowingly profitable tan.
If you’ve never heard of Michael Kors (NYSE:KORS), you either don’t know much about fashion or you don’t know much about hot stocks. This luxury-goods maker’s shares went public in December, and in just over six months the stock has surged nearly 70%. Recently, the company announced that it expects EPS for the first quarter of fiscal 2013 to come in between 18 cents and 20 cents, and revenue to be between $360 million and $370 million.
That guidance was well above consensus estimates for EPS of 17 cents and revenue of $324 million. The shares spiked another 5% on that news. This retailer is firing on all cylinders, and it’s doing exceptionally well in China and even Europe. If you want to own some real luxury, then buy KORS.
Whole Foods Market
Another luxury brand of sorts that’s not feeling any pressures from a slowing economy is Whole Foods (NASDAQ:WFM). The upscale grocery and health-food retailer recently ported a 31% rise in fiscal second-quarter profit. It also said that it would pass on the cost of higher food prices to shoppers.
This brazen announcement hasn’t deterred buyers from doing their shopping at Whole Foods, as same-store sales rose 9.5% during the quarter. As for the shares, nothing seems to be deterring buyers from wanting to own WFM. The shares are up nearly 38% year to date. The gains in Whole Foods business proves once again that high earners will spend their money on living and eating well, regardless of economic conditions — and that’s a trend that will never go out of style.
I’m a bona fide animal lover. I own pets, including a dog, cat, goat, horse and a pig named Orwell. Feeding and caring for my extended family doesn’t come cheap, but I don’t think twice about spending whatever it takes to give them the best that money can buy.
The chief recipient of my pet-care dollars is retailer PetSmart (NASDAQ:PETM), and I’m not the only one. In May, the company posted strong fiscal first-quarter earnings that surged a better-than-expected 34%. PetSmart saw a big rise in same-store sales and improved margins. Then last week the company boosted its quarterly dividend by 18% and unveiled a $525 million share buyback program. The metrics are great for PetSmart and traders know it. The stock is up over 37% year to date, and over the past four weeks PETM shares have soared nearly 25%.