Summer is coming, and the current expectation is for the U.S. economy to begin sprinting, making it a perfect time to look at summer stocks to buy. As Covid-19 vaccines reach critical mass, restrictions are lifted across the country and consumers begin spending again on travel and dining out, we will enter a boom that has not been seen since the late 1990s. Some economists are predicting a boom akin to the “Roaring 1920s” that followed World War 1.
How strong the economic recovery is remains to be seen, but what is clear is that better days are ahead. And as the weather heats up, so could the stock market.
Here, we look at seven hot stocks to buy with summer looming.
- Wayfair (NYSE:W)
- McDonald’s (NYSE:MCD)
- Carvana (NYSE:CVNA)
- Carnival Cruise Lines (NYSE:CCL)
- Vail Resorts (NYSE:MTN)
- Visa (NYSE:V)
- Nvidia (NASDAQ:NVDA)
Hot Stocks to Buy: Wayfair (W)
Boston-based furniture retailer Wayfair has been killing it this year and looks set to extend its gains through the summer months. The e-commerce company now offers 14 million furniture and home-goods items through its website. The company, founded in 2002, was built to withstand an event such as the Covid-19 pandemic. And it looks likely to continue having strong sales as consumer confidence grows throughout this year and people continue to upgrade their homes and splurge on big ticket items such as sofas and beds.
Since January, W stock has risen an impressive 40% to just under $317 a share at time of writing. Since April of 2020, Wayfair’s stock has skyrocketed 312% higher, propelled by strong demand for its products and equally strong online sales. As people outfitted their home offices and upgraded their living environment, they turned to Wayfair.
The company’s revenue doubled to $14.1 billion last year from about $7 billion pre-pandemic, while its active customer base also more than doubled to 31 million from 15 million. Can the momentum last? Likely yes, given Wayfair’s large selection, low prices and the convenience of shopping online.
Next on my list of stocks to buy is MCD. Shares of the Golden Arches are sitting at an all-time high of $231 per share. After sitting idle through the first quarter of this year, MCD stock is now in a full-blown rally, up 11% since the start of March. With summer coming and Covid-19 restrictions easing around the world, shares of the fast-food giant are likely to continue gathering steam, fueled by promotions such as dollar-drink days and as consumers clamor to return to in-store dining.
Of course, McDonald’s isn’t content to simply ride the current economic reopening. The iconic Chicago-based company that is today the world’s largest restaurant chain by revenue is never content to rest on its laurels. Instead, McDonald’s is aggressively building out its drive-thru, delivery and take-away services.
During the pandemic, the company dramatically increased its food-delivery service, growing to offer it at 30,000 restaurants in 75 countries. And, despite the global pandemic, McDonald’s still managed to open 500 new restaurants last year. This year, the company aims to open 1,300 new locations. Shareholders of MCD stock should continue to benefit.
With people commuting into work less often and the work-from-home trend forecast to continue, many consumers are turning to used-car dealers to purchase more affordable second-hand vehicles rather than expensive new ones. Tempe, Arizona-based Carvana is capitalizing on this trend. The online used-car retailer is among the fastest growing used-car dealers in the U.S. It has seen a noticeable upswing in its business over the past year. And summer is traditionally the busiest time of year for motor vehicle sales.
Caravana’s annual revenue grew 42% year-over-year in 2020 in spite of the pandemic. Sales jumped 37% last year, and the company grew its share of the U.S. used-car dealers market to 3.9% from 2.9% in 2019. While some people might be skeptical that Carvana can maintain its torrid growth, the trend toward used vehicles and shopping for them online looks likely to continue.
The company is developing 10 new inspection centers across the U.S., where it inspects and refurbishes used vehicles as needed, and has been hiring in recent months.
Carnival Cruise Lines (CCL)
Pent-up demand is real. And demand in the cruise industry appears to be at a boiling point. Revenues for the cruise line industry are forecast to jump nearly 20% this year as people clamor to get back on the high seas. In all, cruise lines are expected to generate $16 billion of revenue this year, with half of that from the United States. Whether it’s the shuffleboard, the buffet meals or the exotic locations, people love to cruise. And in this frothy environment, Miami, Florida-based Carnival Cruise Lines can only benefit.
Since the end of January, CCL stock has climbed 27% higher to nearly $28 a share. More gains are expected as the world’s largest cruise operator resumes service to destinations ranging from the Bahamas and Bermuda to Tasmania and New Zealand. While the return to service has not been entirely smooth sailing (the Governor of Florida is suing President Joe Biden’s administration and the Centers for Disease Control to try and get cruise ships sailing again), there’s no question that the cruise line industry is one sector of the economy that will come roaring back.
Vail Resorts (MTN)
Investors who get seasick may want to visit the mountains rather than take a cruise. If that’s the case, consider taking a position in Vail Resorts, the Broomfield, Colorado-based company that operates some of the premier ski and golf resorts in the world. From high-end resorts in Vail, Colorado and Whistler, British Columbia, Canada to the Heavenly Mountain Resort in Lake Tahoe and the Hotham Alpine Resort in Australia, the company is a global leader when it comes to mountain vacations. And it’s not just winter skiing that Vail Resorts is focused on. Summer golf destinations are also a key part of the business.
As people begin to vacation again, Vail Resorts is poised to benefit as a four-season leisure and recreation operator. Since Feb. 1 of this year, MTN stock has risen 17% to $308 a share. And analysts see more gains ahead. At the end of March, Bank of America (NYSE:BAC) reaffirmed its $350 price target on the stock and lifted its rating on the shares from neutral to buy.
MTN also announced price cuts for the upcoming ski season in an effort to increase pre-season bookings, a move Bank of America applauded.
How are consumers going to pay for all the shopping, dining out and travel they undertake this summer? With a credit card, that’s how. And among credit-card providers, Visa is one of the biggest and most widely used around the world. In fact, Visa today is the biggest payments processor in the world. And the economic boom is just ramping up, which is good news for Visa and its shareholders.
The credit-card giant is not only positioned to benefit from the great economic reopening but it is also likely to get a boost from the permanent and growing switch to e-commerce. In the next two years, about 22% of all purchases globally will likely be made online. By 2040 that percentage could reach 95%. This means that credit cards are likely to be used with greater frequency in coming years.
V stock is already responding to the anticipated economic reopening, up 15% since the end of January at $221 a share.
We’ve got to include one technology growth stock on this list of stocks to buy, and microchip manufacturer Nvidia gets the nod. After suffering through the tech wreck during the first quarter, NVDA shares are again marching upward. Since the start of March, Nvidia stock has risen 13% and now trades at $624 a share.
However, in addition to the investor rotation out of technology stocks, Nvidia shares were also hurt earlier this year by uncertainty around the company’s proposed $40 billion acquisition of Arm Limited, which would boost Nvidia’s capabilities in the area of artificial intelligence. But concerns over regulatory approval of the Arm takeover seem to be subsiding, and once the deal is completed later this year, it should pave the way for Nvidia and its share price to continue to move forward.
Additionally, the global shortage of semiconductor microchips that is negatively impacting automotive production and consumer technology around the world is causing increased demand for Nvidia’s products that help to power cars and video games, to name only a few items. Heading into the summer, NVDA stock looks ready to gallop, making it a perfect ending to my list of stocks to buy.
On the date of publication, Joel Baglole held long positions in V and NVDA.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.