Summer is at our doorstep, and as we head into the second half of 2021, several stocks have emerged as winners in a volatile market and appear to be heating up along with the weather. Investors trying to separate the wheat from the chaff in their portfolios, or looking to position their holdings for success over the next six months, should consider the following companies. Each has demonstrated strong earnings and is benefitting from advantageous market or sector conditions.
With volatility likely to continue for the time being, it remains a stock pickers market, and investors should look for opportunities to buy the following four stocks on any dip in their share price during the month of June.
- Virgin Galactic (NYSE:SPCE)
- Nvidia (NASDAQ:NVDA)
- Draftkings (NASDAQ:DKNG)
- Southwest Airlines (NYSE:LUV)
Stocks To Buy: Virgin Galactic (SPCE)
What a difference a few weeks can make. Shares of space tourism company Virgin Galactic have been on fire ever since the New Mexico-based company completed its first spaceflight in more than two years on May 23rd. A Virgin Galactic spacecraft named VSS Unity was carried up to an altitude of about 44,000 feet by a carrier aircraft called VMS Eve, where it fired its rocket engine and accelerated to more than three times the speed of sound before safely landing back on the runway at the company’s headquarters known as “Spaceport America.”
The spaceflight was the company’s first since February 2019 and gets it one step closer to bringing tourists into space beginning early next year (2022) at a cost of $250,000 per passenger. News of the test flight sent SPCE stock rocketing 52% higher in the week immediately after its completion. Virgin Galactic shares now change hands at $28.97. Several analysts have upgraded the stock to a “buy” rating and raised their price target on it. Any weakness in the share price should be viewed as a definite buying opportunity.
Stocks to Buy: Nvidia (NVDA)
Shares of Nvidia have been red hot since the Santa Clara, California-based microchip and graphics processing unit company announced a four-for-one stock split on May 21. Since the stock split announcement, NVDA shares have rallied over 14% and are likely to continue climbing until the split is executed on July 20. News of the stock split came just before the company announced blockbuster earnings results that have also helped to lift the share price.
Nvidia reported first-quarter results that showed its revenue grew 84% compared with the same period last year. Earnings and sales both beat the expectations of Wall Street analysts. Revenue in the quarter totaled $5.66 billion versus $5.41 billion estimated by analysts. Earnings per share came in at $3.66 versus $3.28 per share that had been forecast. These impressive results were achieved despite the global semiconductor shortage that is impacting the company’s core business.
In fact, Nvidia guided that it expects revenue of $6.30 billion in the current second quarter, which would be 62% higher than the same period of 2020. Investors should buy NVDA stock if the price dips even a little. If it is too expensive at its current level, then wait for the split to occur and then grab shares.
Stocks to Buy: Draftkings (DKNG)
DKNG stock was heavily beaten down earlier this year, falling 46% from its 52-week high of $74.38 all the way down to a low of $40.99 on May 13th. Since then, shares of the Boston-based sports betting company have turned around and risen roughly 20% to their current level of $48.70. The about face came after Draftkings beat analysts estimates with its latest earnings report, and as sports gambling gains more widespread acceptance across the U.S.
For the first quarter of the year, Draftkings reported revenue of $312 million, much higher than the $231.5 million that had been expected by analysts and 175% higher than the first quarter of last year. The company also raised its guidance for the second quarter by 16%, saying it now expects revenue in the range of $1.1 billion at the midpoint. With fans returning to live sporting events (as many as 135,000 spectators were expected at this year’s Indianapolis 500 event), Draftkings is forecast to do better as the year progresses. Buy shares before football season starts in September!
Southwest Airlines (LUV)
Summer officially begins in June. And that’s good news for Southwest Airlines and its shareholders. Travel is already picking up with the Transportation Security Administration (TSA) reporting that it screened seven times more airline passengers at the end of May than in the same period of 2020. As the largest domestic carrier in the U.S., Southwest Airlines is sure to benefit in the coming months as Americans take long overdue vacation flights.
LUV stock has done well year-to-date, rising about 37% since the end of January to $61.32. Analysts see more upside ahead. The median price target on Southwest Airlines stock is currently $70 with a high estimate of $80 per share. The median price target suggests there could be an additional 15% gain in store for the stock. Maybe more if airline travel comes back with the vengeance that many industry analysts expect. However things shakeout, Southwest Airlines is a good bet for the summer travel season and beyond. Buy the dip.
On the date of publication, Joel Baglole held long positions in NVDA, DKNG and LUV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.