The novel coronavirus is still front and center — that’s true for the mainstream media as well as Wall Street. However, as we continue to see the economy open back up, reopening stocks are increasingly becoming the focus of investors.
When President Joe Biden took office, he set a goal of getting 100 million people vaccinated during his administration’s first 100 days. Soon enough, that goal was bumped up to 200 million people. Then that goal was hit.
The bottom line is simple: this isn’t political, it’s about getting as many people vaccinated as quickly as possible. That will save lives, reduce the pressure on hospitals and bring businesses back to their full capacities.
While many companies have found ways to adapt to this pandemic (and some even thrive) there are still quite a few businesses that are starving for growth. So, as soon as the public can get back to “regular life,” many will pounce at the opportunity to do so. Whether that’s going out to eat, going to a concert or going on a trip, the country is itching for a return to normalcy.
With this all in mind — the vaccination progress and the businesses chomping at the bit for a return — here are a handful of reopening stocks to buy as we get back to pre-pandemic life.
- Boeing (NYSE:BA)
- Wynn Resorts (NASDAQ:WYNN)
- Royal Caribbean (NYSE:RCL)
- Disney (NYSE:DIS)
- Six Flags (NYSE:SIX)
- Airbnb (NASDAQ:ABNB)
- Tripadvisor (NASDAQ:TRIP)
Reopening Stocks to Buy: Boeing (BA)
First up on this list of reopening stocks is Boeing. This name isn’t necessarily a consumer-centric business — that distinction belongs more to the airlines, a group that investors have been staring at for months in hopes of a big move higher. So, while Boeing isn’t invisible, it is the less-obvious beneficiary of a return to normalcy. That’s because it really needs the airlines to come back strong.
Today, BA stock is trading at a steep discount because it can’t seem to gain any near-term momentum. That’s in contrast to some of the airlines, such as Southwest (NYSE:LUV), which is above its pre-coronavirus levels. While that relative strength is great, it also reduces the potential reward for buyers. Because of that, I’m looking at Boeing instead as having future potential once it does gain sustained upside momentum. However, we’ll need to see its business come back to life in order for that to happen.
This company has been sacked by two major issues — its 737 MAX debacles and the collapse in airline traffic last year. As we’ve seen, though, the 737 MAX is working its way back into the lineups of airline operators. Meanwhile, air traffic is enjoying a rapid rebound.
Given that Boeing just came off one of its worst years ever, it won’t have a repeat of 2020. It enjoys a duopoly in the commercial jet space. As airlines begin to find themselves on better footing this year, so too should Boeing.
Wynn Resorts (WYNN)
With a strong vaccination effort already underway, Las Vegas has become a go-to destination for travelers. Weekend occupancy rates are already back to 95% and analysts expect a faster and stronger recovery than previously forecasted.
Alongside a recovery in Las Vegas will come a recovery in the casinos and the resorts. And, once concerts and events pick up steam, operators like Wynn Resorts stand to benefit.
Obviously, Wynn’s traffic, revenue and earnings plunged in 2020. Now for 2021, analysts expect sales to rebound 109% to $4.38 billion. On the earnings front, expectations call for a loss of about $4 per share versus a loss of more than $19 per share in 2020. Finally, next year analysts expect revenue to grow another 43% and for the company to turn in a profit of $1.80 per share.
Provided we don’t have a massive setback in regards to Covid-19, it appears that casino operators are set for a multi-year recovery. On top of that, Macau — a significant revenue generator for Wynn Resorts in Asia — just posted its second consecutive monthly revenue gain as well. So, look for WYNN stock to gain steam as travel trends pick up and Americans make an even larger push to normalcy in the second half of the year. It is definitely one of the reopening stocks to keep an eye on.
Reopening Stocks to Buy: Royal Caribbean (RCL)
Cruise operators are a tough investment. They’re one of the only industries — in fact, perhaps the only industry — to see a 99% drop in revenue. That reality has devastated businesses like Royal Caribbean.
In February, the company reported a more than 98% year-over-year (YOY) decline in revenue for the fourth quarter, with a loss of about $5 per share. Clearly, there’s still pain in the business. However, RCL’s plan is to get back into action — ASAP.
The group hopes to start sailing this summer, which is just a few months away. If they can incorporate vaccination requirements and get back to sailing, RCL stock and cruise stocks in general can really rip.
While Royal Caribbean and others have seen a decent recovery off the lows — particularly with no revenue — the stocks are still well off the highs. But, with lower fuel costs and higher demand, Royal Caribbean should see a solid recovery once sailing resumes. So, for this pick of the reopening stocks, there’s just one question left: when will we start sailing again?
We can’t talk about reopening stocks and not mention this company. Why? DIS stock is interesting because we’ve now seen shares erupt to new all-time highs. While that may be surprising given the hit to the company’s studio and theme park units, investors are bullish about Disney’s streaming success.
After launching Disney+ less than 18 months ago, the company has already surpassed 100 million subscribers for its new service. And that doesn’t even include subscribers to its Hulu or ESPN+ platforms.
Of course, the pandemic dealt a horrendous blow to some of Disney’s businesses. But it also dolled out a one-time super-boost to its streaming platforms. With momentum in streaming and a return to its theme park and studio operations later this year, this company is an entertainment juggernaut. Disney’s theme parks should see a robust recovery soon and a return to studio films should help give it a multi-year growth boost. After a tough year, Disney will need all of the recovery benefits it can get.
Today, DIS stock is near its highs. However, it should still do well over the years to come because of its streaming momentum and the coming recovery.
Reopening Stocks to Buy: Six Flags (SIX)
Unfortunately for Six Flags, this theme park operator doesn’t have 100 million people signing up for its flagship streaming service. Fortunately, though, it has 27 parks throughout North America and Mexico, 23 of which are in the United States.
As summer gets underway and the public increasingly heads to theme and water parks, Six Flags should be able to provide an easy, nearby vacation spot for millions of Americans. That expectation shows up in analyst estimates, too.
Consensus estimates call for 193% revenue growth this year, followed by more than 39% growth in 2022. In 2020, Six Flags experienced an earnings per share (EPS) loss of $4.99. That loss is forecast to fall by roughly 82% to a loss of 87 cents this year. Then, EPS is estimated to grow to a profit of $1.72 per share in 2022.
Obviously, these numbers are just estimates and are subject to change. However, they do give investors in this one of the reopening stocks a sense of the coming recovery.
Although SIX stock is up about fivefold from its 2020 lows, shares are still about 33% below the stock’s 2018 highs. Let’s see if this recovery can fuel Six Flags stock any higher.
Lately, Airbnb hasn’t gotten the attention it deserves as one of the reopening stocks — right now, so many eyes are on hotel stocks instead of on ABNB stock. Not only is Airbnb interesting because it’s a recent initial public offering (IPO) well off the highs, but the company also actually did pretty well during the pandemic.
That’s not to say it was completely smooth sailing, though.
Airbnb was forced to lay off staff, raise capital at a low valuation and accept unfavorable terms to boost its liquidity during the pandemic. For a unicorn status as a private company, Airbnb should have been in a better financial position, even for an unforeseen event like Covid-19. Regardless, the company is now public with a big valuation, commanding a market capitalization over $100 billion.
Impressively, Airbnb saw a recovery in its business much faster than other travel sites. Travelers adjusted their plans due to the pandemic, opting for vacations that were closer to home, longer in duration and located in more rural and remote areas. That made Airbnb far superior to a hotel chain in the era of the novel coronavirus.
Now as the reopening trade is in focus, ABNB is absolutely one of the reopening stocks to watch. As travelers line up for vacations, Airbnb rentals are going to be quite busy in the coming years. Estimates call for 41% revenue growth this year, followed by 35% growth in 2022. Let’s see how that pans out.
Reopening Stocks to Buy: Tripadvisor (TRIP)
Last but not least, TRIP stock is likely set for a big recovery as well. I like Tripadvisor because it generates its revenue in multiple ways.
As consumers turn their attention to review sites, companies like Tripadvisor are seeing a nice spike in traffic. That goes for restaurants, attractions, hotels and more. Customers can book reservations right through the site, giving Tripadvisor a slice of revenue via a booking fee. The company can also generate ad revenue on its app and website, even making money from users who are not necessarily booking anything.
When the world came grinding to a halt, Tripadvisor was adversely impacted along with the decimated travel industry. However, although many businesses will opt for Zoom Video (NASDAQ:ZM) meetings over in-person conferences moving forward, the travel industry is still set for years worth of growth upon reopening.
For this pick of the reopening stocks, analysts expect back-to-back years of 40%-plus revenue growth (nearly 44% in 2021 and nearly 48% in 2022). Still 35% below its 52-week high, investors should be looking for Tripadvisor to go on a big run amid that recovery.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.