When it comes to stocks to buy right now, a good place to look is for those companies that are poised to benefit from the reopening. True, Wall Street has already been focusing on this trend. But it does look like the momentum will continue for a while.
Granted, there are concerns about variants with the novel coronavirus. But it does appear that the vaccines have been holding up. Pharmaceutical companies like Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) are also working hard to improve their offerings, such as with boosters.
In the meantime, the U.S. economy should get a charge from the $1.9 trillion stimulus bill. Note that the Federal Reserve has increased its forecast for Gross Domestic Product for this year from 4.2% to 6.5%. There will also remain a low interest rate policy.
So then, what are some of the stocks to buy right now? Well, these seven stand out.
- Hilton Worldwide Holdings (NYSE:HLT)
- Airbnb (NASDAQ:ABNB)
- TripAdvisor (NASDAQ:TRIP)
- Allegiant Travel (NASDAQ:ALGT)
- American Express (NYSE:AXP)
- Caesars Entertainment (NASDAQ:CZR)
- Comcast (NASDAQ:CMCSA)
Now, let’s dive in and take a closer look at each one.
Stocks to Buy Right Now: Hilton Worldwide Holdings (HLT)
The latest quarter for Hilton was fairly awful. The company posted a net loss of $225 million and the revenues dropped from $2.3 billion to $890 million.
Yet, Hilton’s management remains quite optimistic on the long-term growth of the industry. To this end, the company has continued to invest heavily in expanding its footprint. During the quarter, Hilton approved 18,7000 new rooms for development. This has increased the pipeline to 397,000 rooms.
The company has some key advantages as well. After all, it has a variety of standout brands like Signia, Canopy, Conrad, LXR, Waldorf Astoria, Embassy Suites, DoubleTree and Tempo. Then there is the asset-light business model, which relies generally on franchise fees. Thus, as the economy gets back on track, HLT stock could see continued gains as the profits are likely to be robust, especially since there has already been substantial cost cutting.
In December, Airbnb pulled off a red-hot IPO. The shares spiked by 112.8% and they have since gone on to gain another 160%.
The company has certainly felt the negative impact of the coronavirus. Yet, it has done well compared to many other travel operators (in the latest quarter, the revenues were off about 22% from the previous year). A key is that the company was swift in focusing on domestic short-stay travel.
While there is emerging competition, Airbnb has been able to maintain is edge. The fact is that the company has benefited from network effects and the cost of user acquisition has been been low.
However, perhaps the biggest knock against ABNB stock is that the shares are trading at nearly 17 times revenues. But the market opportunity is enormous, estimated at a whopping $3.4 trillion! So there is considerable room for growth.
Stocks to Buy Right Now: TripAdvisor (TRIP)
TripAdvisor operates the world’s largest online travel platform, which is available across 49 markets. Consider that the monthly user count is at 463 million.
Of course, the coronavirus pandemic has weighed heavily on the business. But the company has been focused on major cost reductions. In fact, note that it has hit its goal of $200 million in annualized fixed and discretionary savings.
The balance sheet is also in good shape. For example, the cash balance is $418 million, up $99 million on a year-over-year basis.
In terms of growth, TRIP stock should get a boost from its Plus business. This is a subscription service that provides customers with discounts and other perks (it’s priced at $99 per year). And according to analysts at Citigroup (NYSE:C), the revenues could get to $1 billion.
Allegiant Travel (ALGT)
The airline industry should benefit nicely from the reopening. But some airlines will likely do much better than others. The reason? Well, for larger carriers, there may be continued challenges with business travel. The fact is that Corporate America have been adapt at handling sales and conferences with video platforms like Zoom (NASDAQ:ZM).
This is why it’s probably better for investors to focus on those airlines that get most of their revenues from vacationers. And a top player to consider is Allegiant Travel. The company’s flights are non-stop and are in the U.S. And yes, Allegiant has a discount model.
Keep in mind that the company has already been showing big improvements on the bottom line. Allegiant has also forecasted a material increase in the number in new flights for the first quarter, at about 120% of capacity compared to the same period a year ago.
In the meantime, the company has been making investments in its IT infrastructure. A major part of this has been with the website and mobile app. According to Allegiant CEO Maurice Gallagher, Jr., on the earnings call: “We are seeing meaningful uptakes in our packages and other products. It was turned on in the last month, and while we are still learning how to use it and what to do with it, the initial response has been positive.”
Stocks to Buy Right Now: American Express (AXP)
With the increase in travel and the impact of the fiscal stimulus, there should be stronger growth for credit card companies. In fact, American Express looks like a top stock to buy right now in this sector. The company is well-positioned to benefit from an uptrend.
The fourth-quarter report has already showed improvement with spending. For example, the non-travel category was actually up 4% on a year-over-year basis. This compared to a 1% increase in the third quarter.
Because American express members generally have higher incomes, the credit losses have been moderate. This is why there was a release of a $674 million reserve in the quarter. In other words, there is likely to be a major gains in the bottom line this year as the economy rebounds.
Caesars Entertainment (CZR)
The casino sector is definitely poised for a nice comeback this year. And a good stock to buy now is Caesars Entertainment.
The company has significant scale, which was increased with the merger with Eldorado Resorts. The result is that Caesars is now the largest casino operator in the U.S.
The merger will also add to the cost cutting efforts as there will be savings from the duplications across the two organizations. So as revenues start to accelerate, there should be lots of operating leverage on the bottom line.
Moreover, there is something else to consider: The market for online gambling has been picking up stream. True, Caesars has been a laggard in this space. But then again, it has the advantage of a large member base. The company may also ramp its efforts with M&A.
Stocks to Buy Right Now: Comcast (CMCSA)
One of the nagging issues with Comcast is the cord cutting with its cable business. But the company has been able to navigate the headwinds.
Of course, a big piece of the strategy is streaming. To this end, the company recently launched its Peacock service (there are 33 million members). No doubt, it has a big advantage with its vast entertainment assets like NBCUniversal. Oh, and the broadband segment has provided lots of synergy and has remained a solid growth driver. Last year there were two million new customers.
But in terms of the reopening, Comcast should see renewed growth with its theme parks and the feature film businesses.
In terms of the valuation on CMCSA stock, it is reasonable. The shares are trading at almost 20 times forward earnings and the dividend is about 1.8%.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.