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Going the Social Distance: Summer Stocks for 2020 and COVID-19

Looking to invest in summer 2020 stocks? Summer typically means travel, family get-togethers, and flocking to theme parks, water parks, and cruises. But with COVID-19 still out there, camping, RVs, golf, cycling, and other social-distance-friendly activities are taking center stage.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Summertime: Stock ideas for social distance investing
5 min read
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Key Takeaways

  • Several studies suggest there may be more car and RV travel in summer 2020 and less air travel

  • Travel activities that lend themselves to social distancing look to be popular in 2020

Summer means vacation, but with the novel coronavirus still circulating, travel is taking on a different look and feel. International trips are out; domestic touring is in.

While staying stateside, be sure to stay safe. Social distancing and wearing masks are still recommended by health experts, both to keep healthy and to help reduce the virus’s spread.

The natural social distancing vacation is visiting the great outdoors, and it appears a number of Americans are leaning this way. A survey by the U.S. Travel Association and MMGY Travel Intelligence found that people who are planning to travel feel safest when visiting outdoor destinations such as parks and the beach.

Both the MMGY survey and a separate AAA survey said vacationers will likely stick to car travel as the top way to get around this summer.

These vacation plans have helped lift a number of outdoor-related summer stocks. Are people are snapping up bikes, camping equipment, and other items that make it easier to enjoy nature?

Relive Summer Camp

The RV sector had been hurt by slumping sales, as some vacationers sought to customize vans to their liking rather than buy a camper, according to Michael Kealy, education coach at TD Ameritrade. That trend hit values for firms like Thor Industries (THO) and Winnebago Industries (WGO). But Kealy pointed out that the firms’ fortunes have turned around sharply in the summer of social distancing; for example, WGO just marked new all-time highs. After all, RVs let you keep your vacation self-contained.

If you’re going to go the RV route, you’ll need to find a place to park it. Many newbies want the convenience of a campsite. Camping World (CWH) has benefited from the RV trend; in May alone, its stock surged 139%. CWH is at its highest level since mid-2018, but comfortably off its 2017 highs. Although the company saw a 3.5% drop in first-quarter revenue, CWH saw a spike in interest for summer rentals, with CEO Marcus Lemonis noting that the first weekend in May was the company’s biggest weekend in history: “period, end of story.”

Another stock benefiting from the summer travel trend is Polaris (PII), which makes all-terrain vehicles, neighborhood electric vehicles, and motorcycles. PII shares took it on the chin during the March 2020 selloff, but shares recovered within a few months.

Get the Gear

If you’re going to rough it, you’re going to need gear. Newell Brands (NWL) owns a number of old-school camping gear brands including Coleman and Marmot, plus storage container brands such as Rubbermaid and Sistema Plastics, which help you keep your food and other supplies safe while toting them around. The stock bounced off its first-quarter selloff low, but remains below its 2020 highs as of mid-June. Morgan Stanley recent upped its price target for the stock, but seven other analysts have a hold rating on it.

YETI Holdings (YETI), which offers popular upscale coolers, are another camping choice. The brand has recently hit an all-time high in its short life—shares went public in October 2018.

Deckers Outdoor (DECK), which makes outdoor footwear brands including Hoka One One, erased its COVID-19 losses and in May outpaced the S&P 500 with a 23% gain. The company’s fiscal fourth-quarter earnings report showed the firm had steady results through the early part of the pandemic.

People who are buying outdoor gear may consider visiting a one-stop shop like Dick’s Sporting Goods (DKS) or specialty retailers such as privately held REI or Patagonia. Like many retailers, DKS was hit hard by store closures, with the company saying in its first-quarter earnings report that same-store sales fell nearly 30%. That led to a $1.71 net loss for the first quarter, when analysts expected a $0.57 loss. However, the sporting goods store said online sales surged 210% during the lockdown. That’s helped the company recoup most of its pre-COVID-19 losses.

Camping isn’t the only outdoor activity. Most bicycle manufacturers trade in the over-the-counter market. But if you wanted to practice your swing for your portfolio, Callaway Golf (ELY) could be a chip shot. ELY is back above where prices sold off in March and is on a solid uptrend.

Golf brands could benefit from states reopening their golf courses. Christine Loose, vice president of lodging and wellness for Kohler, remarked that Destination Kohler (a luxury resort about an hour north of Milwaukee), has seen a strong pickup in demand for many of its wellness and outdoor activities, in particular tee times for its four championship golf courses.

Summer vacation and summer stocks this year will look different than usual, but that doesn’t mean you can’t have fun. This social distance summer could be a good time for you and potentially for your portfolio.

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Key Takeaways

  • Several studies suggest there may be more car and RV travel in summer 2020 and less air travel

  • Travel activities that lend themselves to social distancing look to be popular in 2020

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