With Memorial Day behind us, the official “unofficial” start to summer is here.
And we all know the old Wall Street adage about selling in May. (We’re supposed to do it.) According to the Stock Trader’s Almanac, the markets have only produced a meager 0.3% average annual return from May to October since the 1950s. That in turn means that many stock brokers are hitting the Hamptons, working on their tans and trying to shore up their tennis game.
The key word there? Average.
Anyone who thinks every stock on the market declines 0.3%, and does so in a nice straight line, doesn’t understand how it works. Many stocks will get pummeled, bringing down the average … and several great stocks will have robust summers, rewarding investors who stuck things out.
And that’s where you should be.
The following is a list of 10 stocks to buy that have catalysts with the potential to break through the summer doldrums and make you some money for the next few months. So if you’re willing to actually put your money to work this summer, this is the place to start.
In no particular order …
Great Stocks to Buy for Summer: Walt Disney (DIS)
Walt Disney Co (DIS) hasn’t exactly been killing it over the last few months. The House of Mouse recently reported a rare earnings miss and has a huge flop on its hands with Alice Through the Looking Glass. Plus, let’s not forget the financial issues and cost cutting going on over at ESPN.
And yet … DIS might be one of the best stocks to buy over the summer.
For starters, Disney is making a huge inroads in China. Shanghai Disneyland is slated to open in June, and already, initial buzz is huge, and people are even swamping the public areas around the to-be-opened park. When it does open, it should provide a huge influx to the company’s theme park business.
Secondly, Disney may have gotten a handle on its ESPN problems. Viewership of the sports network is down considerably, but Disney has unveiled a series of apps for streaming devices that should help counter the trend.
A high-single-digit bleeding in the past month or so has left DIS shares a bit oversold, and that coupled with these other drivers should help push Disney higher over the summer.
Great Stocks to Buy for Summer: Under Armour (UA)
Under Armour Inc (UA) has placed its marketing bets behind basketball superstar Stephen Curry. The two-time MVP has led his defending champion Golden State Warriors to the NBA Finals once again. Curry has become a household name and made Under Armour a ton of cash. Curry’s shoes, shirts and other equipment will make Under Armour a cool $200 million for this season alone.
If Curry leads the record-setting Warriors to another title, expect another big boost to Under Armour this summer.
But it would be a disservice to Under Armour to chalk up any potential success to Curry. UA has been eating rival Nike’s (NKE) lunch over the last few years, racking up sponsorships across a number of sports and going toe-to-toe with Nike in a number of sporting goods segments, from football and baseball to golf and even fishing.
Curry could be the catalyst for a great UA summer, but ultimately, Under Armour’s continued dominance will push it through to the end of the year and beyond.
Great Stocks to Buy for Summer: Whole Foods Market (WFM)
“Whole Paycheck” is getting a lot cheaper, and that’s huge news for Whole Foods Market, Inc. (WFM).
Whole Foods recently opened its first Whole Food 365 store — a smaller-format location that will stock only a quarter as many products as a regular store, and that will feature fewer frills. Yes, there’s a cheese section. No, there’s no cheese monger. It’s very grab-and-go styled, with Whole Foods’ house-brand 365 Everyday Value products front and center.
It also has a huge dose of tech, tablet ordering, apps and automated robotic tea blending robots.
All of this automated and low-price focus is meant to bring in the millennial crowd that couldn’t afford to shop at Whole Foods before, but that still has some money to spend.
Based on the initial buzz, this initiative might just work — and buzz over the potential here could make WFM one of the best stocks to buy this summer.
Great Stocks to Buy for Summer: Expedia (EXPE)
It maybe cliché to pick travel firm Expedia Inc (EXPE) as one of the best stocks to buy for this summer. But the truth is, EXPE should have a banner quarter or two.
Expedia is one of the largest online booking sites for vacations and travel around, but Expedia Inc includes not just its namesake site, but also Trivago, Travelocity, Orbitz, CheapTickets.com and HomeAway. That huge grouping of hotel, car rental and other booking sites gives it a powerful advantage when customers head online to cement their summer vacations.
And things look really good when you consider this summer’s predicted travel volumes.
With low gas prices and better economic relatively for many Americans, travel this summer is heating up. Globally, airlines are expecting the busiest summer in the history of U.S. air travel with more than 222 million travelers expected to fly over the next few months. AAA predicts similar high volumes of traffic for driving and hotel demand here in the U.S.
EXPE could be looking at very nice summer indeed.
Great Stocks to Buy for Summer: Urban Outfitters (URBN)
Retail hasn’t exactly been the best place for investors to find gains in recent quarters. However, for seller of hipster cool T-shirts, accessories and other goods made for city dwellers, Urban Outfitters, Inc. (URBN) may be bucking the trend.
The key for URBN has been inventory management — not just timing the number of products in its warehouses, but timing what customers will want before they want them. The firm hired predictive analytics specialists at Celect to help manage what products it actually sells. Celect’s software combs through customer data, trends and other metrics to help create an ideal assortment of goods. It basically takes the guesswork out of the merchandise planning.
For a store that caters to fickle hipsters, teens and college students, that’s a huge win.
It could also be a huge win for investors. URBN has already done well in creating the so-called omnichannel retail experience of store, online and catalog. By adding Celect’s software to the mix, URBN should be able to boost sales even further. Already, Urban has enjoyed solid results with fewer markdowns as a result.
The addition of Celect might have gone mostly unnoticed, but it actually makes URBN one of the best retail stocks to buy for the summer.
Great Stocks to Buy for Summer: Chesapeake Energy (CHK)
The story at Chesapeake Energy Corporation (CHK) has been about one thing over the past few years: debt. Crushing debt. And that issue has been compounded by low oil and natural gas prices.
But things are starting to look up, and CHK could be among the best stocks to buy for a summer surge.
For starters, oil prices are stiffening up; crude has surpassed $50 per barrel. That’s big for Chesapeake, because even though it’s still very tied to natural gas, it has added a lot of natural gas liquids (NGLs) capacity over the years, and prices for that are tied to crude oil.
Prices for NGLs are tied to crude oil. So any increase in oil helps boost CHK’s bottom line.
Any boost in cash flows from rising oil prices can go a long way in helping pay down its debts, too. CHK made some progress on that front last quarter.
These higher and rising oil prices bode well for most of the energy sector, but CHK especially could be a summer treat.
Great Stocks to Buy for Summer: GoPro (GPRO)
The summer season is obviously a precursor to the critical fourth quarter and the beginning of holiday shopping.
For action camera superstar, GoPro Inc (GPRO), this could be a make-or-break couple of months.
To say that GPRO has been struggling of late would be an understatement. Sales misses, quarterly losses and stale product lines have sent shares into an absolute spiral. GoPro is off 20% in the past three months and down 80% in the past year.
The former momo stock could get its mojo back this summer, though, with a big-time launch.
GoPro is set to release its long awaited drone, the Karma, sometime near the end of the summer or the beginning of the holiday shopping season. This product is seen as “must-have” for GPRO because rivals have designed drones that can carry its cameras. Offering drone-camera packages should bring more sales back home.
Anticipation is high, and the expectation of the product being a hit is there. The launch could just be what helps put this battered stock on the rebound.
Great Stocks to Buy for Summer: United Technologies (UTX)
On the surface, United Technologies Corporation (UTX) is a pretty boring firm. The company is an industrial giant that offers plenty of aerospace and manufacturing muscle, but also brands like Otis elevators and escalators — and in return, that generates steady cash flows and big dividend payouts for investors.
It’s not exactly the kind of stock that could set the summer on fire, but …
UTX is a buyout target.
Rival Honeywell (HON) already offered more than $90 billion in unsolicited bid for UTX during the first quarter. While UTX balked and walked away from that buyout, it just goes to show that the gears are in motion. United Technologies already has been selling down some of its less-than-stellar businesses in an effort to get “lean and mean” and drive profitability.
A smaller UTX could be easier for another industrial rival or private equity firm to swallow.
Meanwhile, a 2.6% dividend will pay investors who are OK sitting around and waiting for something to pop.
Great Stocks to Buy for Summer: Kinross Gold (KGC)
Gold is getting another hard look from investors these days.
The combination of poor global economic growth, negative interest rates and growing demand in Asia has added some sparkle to the precious metal in the last few months. Gold is now well north of $1,200 per ounce, and the most recent jobs report helped kick the dollar down — always a plus for the yellow metal.
Struggling gold miner Kinross Gold Corporation (USA) (KGC) is already responding positively.
Like previous pick Chesapeake, KGC expanded heavily during the boom years with a big dose of debt. The problem is that it has struggled to pay those debts off amid gold’s crash. However, as gold prices head higher, so will cash flows, and that will better allow Kinross to pay its debts.
That also will allow Kinross to “live within its means” and use cash flows to pay for a little expansion. For instance, KGC’s Tasiast mine is finally getting the needed funds to make it a profitable working project.
Great Stocks to Buy for Summer: Biogen (BIIB)
Biotech drug companies aren’t always small-time firms whose futures hinge on a single drug in FDA trials. Sometimes, they’re monster outfits with a number of major hits and expansive pipelines.
Biogen Inc. (BIIB) fits into the latter camp.
BIIB’s major catalysts come down pipeline and drug approvals. Biogen’s new Alzheimer’s disease treatment, dubbed aducanumab, was accepted in the European Medicines Agency’s PRIME program, which essentially is a fast-track system for new drugs. Biogen and partner AbbVie (ABBV) also received FDA approval for their Zinbryta multiple sclerosis drug. And its blockbuster Tysabri was approved for expanded use in patients in Europe.
And all this happened in the past month.
Also in the background, Biogen is planning on spinning out its steady hemophilia drug business to focus on more high-growth opportunities.
In short, summer could be very kind to BIIB stock.
As of this writing, Aaron Levitt did not have a position in any of the aforementioned securities, but he does love his Under Armour CoolSwitch shirts for boating.