7 Stocks to Buy Following Vaccine Victories

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Stocks to buy - 7 Stocks to Buy Following Vaccine Victories

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The novel coronavirus has dealt a crippling blow to various industries and sectors, translating to tens of thousands of businesses. It’s impacted inflation, stock markets, labor markets, interest rates and a whole swath of other financial metrics. Surprisingly, though, there hasn’t been any shortage of stocks to buy.

The stock markets reacted to the initial Covid-19 trauma with a breathtaking and stunning decline. The S&P 500 fell about 35% inside of a month. However, the market found its footing and soared to the upside. It’s been grinding away at all-time highs without even 5% correction for months.

That said, the industries and sectors that were hit hard are still struggling through the mess that Covid-19 has left — and is leaving — in its wake. With the successful deployment of vaccines from drugmakers like Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA), Johnson & Johnson (NYSE:JNJ) and others, we’ve been able to achieve some state of “normal” once again.

With more than 75% of U.S. adults with at least one shot of the vaccine, let’s look at a few stocks to buy that could start to see the multi-year impact by a return to business.

  • Disney (NYSE:DIS)
  • Delta (NYSE:DAL)
  • Southwest Airlines (NYSE:LUV)
  • MGM Resorts (NYSE:MGM)
  • Wynn Resorts (NASDAQ:WYNN)
  • Boeing (NYSE:BA)
  • Cruise stocks (NYSE:CCL), (NYSE:NCLH), (NYSE:RCL)

Now, let’s dive in and examine each one closer.

Stocks to Buy Amid Vaccine Strength: Disney (DIS)

Disney (DIS stock): An illustration of the magical kingdom castle at night with fireworks behind it

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Disney is the ultimate hybrid here. It has a formidable “lockdown” business with its ESPN+, Hulu and Disney+ streaming platforms. The last of these three already has more than 116 million subscribers and launched at a perfect time, in November 2019.

Now, though, studio hits are performing better than expected, while the company’s theme parks are back up and running.

Should the vaccines continue to drive tourism higher, then Disney’s studio, cruise and theme parks should continue to show improving results. Not to mention, Disney’s streaming efforts got a massive boost as well, while sports are back in full swing and should remain that way going forward (boding well for Disney’s ABC and ESPN units).

Moreover, the company’s acquisition of Fox gave it control of Hulu and provided a whole suite of new content — as if Disney needed more content.

So, while it did take a big hit due to Covid-19, Disney should be stronger than ever as it pushes into future decades.

Delta (DAL)

Delta (DAL) airlines plane mid take-off

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The airlines are in a tough spot. They have to balance so many things to make operations run smoothly. Unlike Disney, a company like Delta doesn’t have multiple revenue streams, nor was it fresh into a “pandemic play” with the launch of its own streaming platform.

I still think Delta and other airlines should have considered selling discount gift cards to keep cash flows coming in, even though it would hurt margins later. Regardless, that didn’t happen, but these companies didn’t go belly-up thanks to the government.

Now, though, Delta is trying to balance having enough staff to run their operations smoothly, without it costing the company too dearly on the bottom line and at a time where things can change in an instant.

International routes are up and running and airline traffic has improved off its worst levels. These metrics and this industry are likely to remain a bit bumpy going forward. But it’s hard to deny that those that have been vaccinated are feeling more comfortable about getting out and taking some trips.

As a result, it seems like Delta — one of the highest quality airlines out there — could see some upside.

Stocks to Buy Amid Vaccine Strength: Southwest Airlines (LUV)

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Another airline with upside potential? Southwest. When all the Covid-19 developments were under way, I was pointing out that Southwest is the highest-quality airline in the sector. It was also the best-performing major airline stock.

Southwest stock held up better than any other major airline amid the decline, while it sports the strongest balance sheet among its peers. As management pointed out in the summer of last year, Southwest was “the only investment-grade credit rating in the U.S. airline industry by all three agencies.”

Furthermore, Transportation Security Administration (TSA) traffic is up more than double year-over-year (YOY), but still remains lower by about 25% to 35% from 2019 (depending on the comparison time). That shows that not everything is perfect, but it also highlights the opportunity.

Overall, airline stocks were on the rise earlier this year as investors were hopeful and optimistic about the vaccines. Then, the stocks sold off in the summer despite summer vacations and traveling plans — a “sell the news” reaction. Now down almost 25% from the highs and heading into the fourth quarter, there could be some upside in Southwest’s future.

MGM Resorts (MGM)

A photo of the MGM logo on the MGM casino building.

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MGM Resorts has been dragged down with the rest of the casino stocks, down just over 8% from the highs set in June. Of course, there have been worries about how Covid-19 will impact tourism, especially with the fall and winter seasons not too far off.

For casino operators, they also have Macau to contend with.

“To contend with.” A few years ago, this was a major growth driver for the groups. Now, it’s an area of contention. Not only is the region struggling with its own handling of Covid-19, but increasing government regulations have introduced new risks to this part of the business.

For MGM stock, the company has less Macau exposure than some of its peers, although it’s not completely unaffected.

Still, 80% of government revenue is generated by gaming in Macau, as is more than 50% of its GDP. I get trying to diversify itself away from gaming, but it’s unlikely to bite the hand that feeds it — at least, too hard.

On top of that, a full slate of sports should allow MGM and other bookmakers to generate additional sports-gambling revenue.

Stocks to Buy Amid Vaccine Strength: Wynn Resorts (WYNN)

the Wynn resort in Las Vegas

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The riskier version of MGM? Well, that would be Wynn Resorts. However, with that elevated risk comes increased potential reward. Should the casino stocks see a snap-back in share price, Wynn will likely be an upside leader.

The stock has been absolutely buried from the recent highs. In just a few days from Sept. 13 to Sept. 21, we’ve seen a 24% dip in the stock price. Even with the slight bounce, shares are still down more than 40% from the March high.

This name has not been performing well, despite owning prestigious property in Las Vegas. The problem? Well Covid-19 is an obvious headwind, but Macau’s not helping. Wynn has larger Macau exposure than many of its peers, making it more vulnerable to regulatory headwinds in the region.

We’ve all seen how these types of headwinds can have negative impacts.

In any regard, back above August low (at $87.52) gives Wynn a chance to reclaim this level and power its way higher. Keep an eye on this one for a potential reversal.

Boeing (BA)

Boeing (BA) passenger airplane with open exit door, passenger windows, cargo door, close up view of Boeing logo

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Boeing was hit by a one-two punch. First, its 737 MAX program created a massive amount of headaches. Two fatal crashes resulted in a global grounding of the aircraft. Ensuing issues with the Federal Aviation Agency (FAA) and other global aviation administrations has created one issue after the other.

Then Covid-19 happened, sending airlines into a tailspin and thus, crippling sales for Boeing. There were serious concerns about this company because of the various headwinds that it was facing.

But now the airlines are emerging from Covid-19, the 737 MAX fiasco is mostly in the rearview mirror and new jet orders have been flowing through.

Moreover, let’s not forget that Boeing holds a duopoly position in the large aircraft market. Not just here in the U.S., but globally. It may take some time to get things sorted out and really “return to normal” in the aircraft business, but Boeing will be there producing jets for the world. It already is.

While the stock has rallied hard off the lows, it’s also languished over the past few quarters. Look for this weakness to eventually resolve higher. The company is critical to the aircraft market and as a major defense contractor for the U.S., there’s no way Boeing will lose its relevance.

Stocks to Buy Amid Vaccine Strength: Cruise Stocks (RCL, NCLH, CCL)

CCL stock cruise stocks docked cruise ships

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I don’t want to say it doesn’t matter which cruise stock an investor buys, but this group tend to trade together. If the market is bullish on cruise stocks, then Carnival Cruise, Norwegian Cruise Line and Royal Caribbean are all likely to trade higher. Conversely, if the market is bearish on the group, then the trio is likely to head lower.

All three stocks have a similar debt-to-equity measure, although Carnival easily has the most cash and equivalents, at more than $7 billion.

Collectively, the reality is that there is still demand for cruising despite Covid-19. There’s enough of the population that is either not deterred by the virus or that is confident enough to travel with the vaccine.

We’ve heard from multiple management teams that booking trends are strong and as these companies start to get their ships back up and running, it will finally breathe some life into the income statements.

The cruise operators don’t have an easy path forward, but at least they have one. As long as the Centers for Disease Control and Prevention (CDC) or another group doesn’t step in and halt cruising, the upside potential is there. Remember, these stocks are still down anywhere from 40% to 60% from the pre-coronavirus 2020 highs.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.


Article printed from InvestorPlace Media, https://investorplace.com/2021/09/7-stocks-to-buy-following-vaccine-victories/.

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