While conventional wisdom – sell in May and go away – suggests that the warmer months might not be profitable for investors, leisure-themed top stocks for summer just might outperform several other sectors. Following a rough period during the Covid-19 years, people want to return to their normal routines. This includes taking advantage of summer to vacation and socialize.
To be fair, the consumer economy has its bruises, perhaps most noticeably stubbornly high inflation. As well, nuanced cracks in the system warrant some caution. At the same time, the May jobs report came in much hotter than anticipated. Therefore, high-potential summer stocks may swing northward as consumers take advantage of one last crack at the bat.
Also, it’s not just pure entertainment plays that might benefit from rising temperatures. With potentially increased travel comes spiked demand for energy, which may bode well for the best stocks for the summer season tied to the hydrocarbon industry.
As with anything in life, there will be risk factors involved. However, if you desire to stay in the market during this ambiguity, buy these stocks this summer.
Delta Air Lines (DAL)
With consumers eager to fully stamp out the Covid-19 crisis from their lives – much like a startled homeowner might smash a centipede – airline giant Delta Air Lines (NYSE:DAL) should be a solid idea for top stocks for summer. As far as I’m aware, the vast majority of countries are now open to American tourists. And if they’re not open, well, maybe you shouldn’t go there.
Looking at Delta’s financials, the snapshot view presents a tricky narrative. Sure, you can look at its long-term revenue and EBITDA growth rates, which hardly impress. At the same time, Delta suffered severely from the Covid crisis, in particular, because it offers international flights. Now that this revenue stream has reopened, DAL may be one of the high-potential summer stocks.
Don’t just take my word for it. According to data from TipRanks, Wall Street analysts peg DAL as a unanimous strong buy. And that’s among 11 experts. Overall, their average price target lands at $53.55, implying over 25% upside potential.
EPR Properties (EPR)
Headquartered in Kansas City, Missouri, EPR Properties (NYSE:EPR) is structured as a real estate investment trust. Specifically, it invests in amusement parks, movie theaters, ski resorts, and other entertainment properties. Per its public profile, EPR owns 353 properties as of 2022. Fundamentally, EPR makes a case for top stocks for summer because of its diverse footprint. It’s almost like an exchange-traded fund.
Financially, EPR also makes for a tricky case because of the Covid-19 impact. In 2020, the company’s revenue slipped to $414.7 million, down more than 36% against the prior year. However, it’s on a recovery trek. In the first quarter of 2023, EPR rang up sales of $171.4 million, up nearly 9% from the year-ago quarter’s tally of $157.5 million.
Even with this performance, EPR trades at 4.99 times trailing-12-month sales, which is undervalued against other REITs. Notably, analysts peg shares as a moderate buy with a price target implying almost 10% growth. Thus, it’s one of the best stocks for the summer season.
Six Flags (SIX)
Perhaps an obvious case for top stocks for summer, Six Flags (NYSE:SIX) ranks among the most popular amusement parks. According to its corporate profile, Six Flags features properties in Canada and Mexico, along with its home U.S. market. With consumers – especially young consumers – eager to have a normal summer, SIX might fly higher. Since the Jan. opener, shares gained nearly 14% of equity value.
To be fair, the financials do require prospective investors to recognize the broader context. Yes, Gurufocus indicates that Six Flags’ three-year revenue growth rate (on a per-share basis) pings at 2.9% below zero. On the other hand, the company suffered a tumultuous 76% loss in revenue in 2020 because of Covid.
However, it’s on a recovery path. In Q1 2023, Six Flags posted $142 million in revenue, up nearly 3% from the $138 million delivered in the year-ago quarter. Priced at a forward multiple of 12.22, SIX might be a discount to believe in because of the burgeoning fundamental trend. Per TipRanks, analysts peg SIX as a moderate buy with a price target implying nearly 15% upside. In my view, it’s one of the best stocks for the summer season.
Across various investment platforms, I’ve been pounding the table on Imax (NYSE:IMAX). A manufacturer of advanced projection systems, Imax delivers an experience that you can’t get anywhere else. You can have the opinion that the box office is dead, for example. But that narrative won’t impugn Imax because streaming services can’t replicate the company’s immersive experience.
And isn’t that what all the Gen Z folks are screaming about, experiential this and that? By logical deduction, just purely based on consumer demographics, IMAX ranks among the top stocks for summer. Financially, I can see where investors without considering the context might be turned off. Again, Imax represents one of the businesses that incurred red ink for long-term revenue and EBITDA growth. At the same time, let’s also look at recent trends. In Q1 2023, it posted $86.9 million in sales, up nearly 45% against the $60 million posted one year ago.
According to TipRanks, analysts peg IMAX as a moderate buy. With a $24.88 price target (implying 43% growth), it’s a relatively easy case for stocks ready to sizzle.
Exxon Mobil (XOM)
As an oil and gas giant, Exxon Mobil (NYSE:XOM) might not court much sympathy from modern investors. After all, we’re apparently moving headfirst into renewable energy platforms. Wake me up when we do. Until then, the world runs on hydrocarbons. With potentially increased travel on the horizon, XOM ranks among the top stocks for summer.
Basically, Exxon Mobil is all about positioning in the infield. You know the tendencies of the opposing batter with strong confidence. So, just cheat up to where the ball will likely be.
On the financial front, I must say that Exxon Mobil recovered very well from the depths of Covid-19. Remember those days when crude oil printed a negative price? Well, Exxon doesn’t. Per Gurufocus, its three-year revenue growth rate pings at 15.9%, above 62% of its peers. Also, it delivers strengths in the balance sheet and on the profitability equation.
Even with the upward trend, analysts believe in XOM’s potential. It’s a moderate buy with a $128.25 price target (implying over 23% upside). Thus, it’s one of the high-potential summer stocks.
Hertz Global (HTZ)
Another blast from the Covid past, Hertz Global (NASDAQ:HTZ) unfortunately went to the grave. When the car rental service declared bankruptcy, it represented an ignominious benchmark of pain associated with the pandemic. However, post-bankruptcy, circumstances now look much better for Hertz, particularly with a reinvigorated consumer base. I mean, it’s not wholly energized but folks are still opening their wallets. That’s good news for HTZ, one of the top stocks for summer.
Onto the financials, Hertz will require context and patience. Again, Gurufocus will tell you on its fiscal snapshot that the company’s long-term revenue and EBITDA growth slipped significantly into negative territory. However, HTZ ranks among the aspirational, anticipatory ideas among the best stocks for the summer season.
For instance, in Q1 2023, Hertz posted $2.05 billion in revenue, up 13% on a year-over-year basis. We should expect growth this summer, making HTZ worthwhile speculation. Lastly, analysts peg HTZ as a moderate buy, along with a $24 price target that implies 36% growth.
Vista Outdoor (VSTO)
With the arrival of the warmer (vacationing) months, politically agnostic investors should consider Vista Outdoor (NYSE:VSTO) as one of their top stocks for summer. Although the company divested its firearms business, it still holds its ammunition and shooting sports accessories business. Understandably, the industry itself attracts controversy and I’m going to argue pro or against.
However, the objective reality is that shooting sports are very popular. Historically, efforts to curtail the sector’s enthusiasm only make the underlying equipment even more popular. Therefore, VSTO ranks among the best stocks for the summer season because it’s a goldmine (albeit a controversial one).
Financially, unlike the other stocks ready to sizzle, Vista delivers the goods. Its three-year revenue growth rate clocks in at 21.5%, above 90.3% of sector peers. However, it still trades at a bargain, with a forward multiple of only 5.9. Turning to Wall Street, analysts peg VSTO as a moderate buy. However, their average price target of $42.50 is anything but moderate, implying nearly 54% growth.
On the date of publication, Josh Enomoto 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.