Hot Summer Stock Picks to Buy - PCLN, HOT, RGC, IMAX, HMIN

AAA said last year American’s spent an average of $1,052 on travel. This year, it estimates they will spend closer to $800 — but as Memorial Day approaches, it’s worth acknowledging which stocks could still see a windfall from summer travel spending even though on the whole budgets appear slimmer. My top stock picks include Priceline.com (PCLN), Starwood Hotels & Resorts (HOT), Regal Entertainment Group (RGC), IMAX Corp. (IMAX) and Home Inns & Hotels (HMIN).

If you’re looking for a way to cash in on summer spending, check out the following stock picks for your investment portfolio. All of these companies have great fundamentals and should serve you well both in the short term as the market stays choppy and beyond the summer months as the recovery continues in 2010.

Online Travel Stocks – EXPE, OWW, PCLN

The first place people look for airplane tickets is travel service websites like Orbitz Worldwide (OWW), Expedia (EXPE) or Priceline.com (PCLN). These sites allow users to search multiple carriers, find hotels and book rental cars all in one transaction. I’m a big fan of these sites, since Orbitz, Expedia and Priceline earnings all impressed recently. But there’s only one that I would recommend that you buy, and that’s PCLN stock.

With Priceline’s patented business model, the company generates virtually all of its sales from travel-related services. Value-conscious consumers really love Priceline’s ability to “haggle” on prices. This has allowed the website to become an oasis for cash-strapped consumers, generating huge numbers even during the recession.

Hotel Stocks – MAR, HMIN, HOT

Now, once you’ve determined your destination, you’ve got to find a place to stay. But with travel spending down as we discussed, that has resulted in fewer rooms for many hotels and a smaller profits. Take Marriott International (MAR), one of the most recognizable hotel brands in the world. Though the company posted decent earnings recently that topped expectations, this weak outlook has really weighed on shares. Since the Marriott earnings report on April 22, share of MAR stock have fallen over -10%.

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But there is one important thing we can take away from Marriott’s troubles: Marriott recently announced that it plans to grow its business in China, doubling its presence there by 2015.. This is a smart move, in my opinion, because China is quickly becoming one of the primary engines of the global economy, meaning that it will soon become an important travel destination as well. If Marriott gets ahead of the curve, it could be rewarded significantly.

That leads me to my top China hotel stock, Home Inns & Hotels (HMIN). The company has posted three straight earnings surprises with an average beat of almost 50%.

Of course, if you want to go domestic and forgo China hotel stocks, there’s always Starwood Hotels & Resorts (HOT). Starwood operates in North America and focuses on luxury and full-service hotels and vacation rentals. This company recently posted a jaw dropping 550% earnings surprise, after an earnings beat of over 100% in the previous quarter.

If you’re looking for hotel stocks to buy, HOT and HMIN are both good buys right now and should serve your investment portfolio well.

Entertainment Stocks – IMAX, RGC

No summer would be complete without seeing a big blockbuster movie on a rainy day. With the big budgets, 3D and CGI technologies, you’d be especially remiss to pass up seeing one of these films. While I’m not going to speculate on which summer releases will bring in the most revenue, I can tell you which movie companies are making the grade right now. Let’s take a look.

If you head to the movies this summer, it’s likely you’ll find yourself inside a Regal Entertainment Group (RGC) theater. The company operates 6,768 screens in 548 theatres around the U.S., so it’s not hard to find a location. IMAX Corp. (IMAX), with only 430 screens, is not nearly as ubiquitous but is making a name for itself as the preeminent theater experience. I always say the experience is the most important part of seeing a movie, and with its crystal clear sound, jumbo-screens and stadium-style seats, IMAX has the best experience hands down. So maybe you, like me, will be willing to drive a few extra miles to find an IMAX theater.

IMAX stock is up 25% year-to-date and is going strong. As for Regal, RGC stock is up about 5% — but considering the market is down by about the same amount, this is no small feat.

Tell us what you think here.

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All five of these companies have explosive growth potential, rock-bottom valuations and are priced under $10 per share. PLUS, they’re set to double even if the market plunges — get their names here.

Online Travel Stocks – EXPE, OWW, PCLN

Hotel Stocks – MAR, HMIN, HOT

Entertainment Stocks – IMAX, RGC

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