With employment numbers and economic growth improving, Americans are antsy to have some fun this summer! Stocks like Apple, Amazon, Facebook, and Google – the four horsemen of tech – ride highest in the winters, when people are locked inside with their devices. Coming off a particularly harsh winter this year, U.S. consumers are especially eager to travel and vacation, and there are three stocks that stand to benefit most of all from these trends.
Take a Bite out of The Big Apple’s Entertainment Budget
Madison Square Garden (Nasdaq: MSG) is one of the most famous sporting and entertainment venues in the history of civilization. But MSG the company is much more than just MSG the arena – the firm also operates MSG Media, which produces and develops original content. The MSG Media segment includes the MSG television network, various regional networks, and Fuse TV. Furthermore, MSG Entertainment hosts concerts and other special events; and MSG Sports owns and operates the New York Knicks and Rangers franchises, among other properties.
Institutional investors have been sweetening up to MSG for some time. Indeed, the stock’s six-month Accumulation/Distribution grade of A- is the best in the leisure-services stock group, indicating that big-money investors are more bullish on MSG than any of its peers. Why is the “smart money” so bullish? Because this summer promises to be a good one for MSG, and as of now, earnings expectations remain low. The stock is in a confirmed uptrend and trading less than 3% shy of its 52-week high. With an 18.6% pretax profit margin and zero long-term debt, MSG looks like an excellent stock to capitalize on the summer renaissance and to hold for the remainder of 2014.
Win or Lose, Investing in This Car Renter Never Hertz
Avis Budget Group (Nasdaq: CAR) is a household-name car-rental company with huge growth over the past several quarters. Last quarter’s earnings per share (EPS) doubled when compared to the same quarter last year, and estimates are calling for 22% additional growth when the firm releases its next quarterly earnings report in early August. Avis has been growing EPS at an annual pace of 21% over the past three years, and – as with MSG – institutional investors have been increasing their stakes in the firm over the past six months.
Shares of Avis have surged by 49% as of July 11, from a 2013 year-end price of $40.42 to a recent $60.26. Despite this, Avis remains undervalued across several key metrics: Avis’s price-to-sales ratio of 0.8 is half the industry’s average of 1.6, and Avis’s 2.9 price-to-cash flow ratio is also half the industry average of 5.8. On a forward basis, Avis’s P/E of 16.8 yields an insanely low PEG ratio of 0.2! How often do you have the opportunity to buy a blazing growth stock with a 0.2 PEG? Not often, and that’s why Avis looks like a fantastic stock for the remainder of the year.
Will This Roller-Coaster Stock Get Stuck at the Top?
Cedar Fair LP (NYSE: FUN) operates 11 amusement parks, three outdoor water parks, an indoor water park, and four hotels. On July 2, the firm held the NYSE’s closing bell ceremonies at its flagship park, Cedar Point, in Sandusky, Ohio. CEO Matt Oumiet said that the company looks forward to its busiest months of July and August, and that the firm stands poised to achieve its fifth consecutive year of record results. Last year, Cedar Fair reported net income of $108 million on sales of $1.14 billion.
Year-to-date, Cedar Fair is up just 3.8%, but the summer has just begun. Cedar Fair looks great from a valuation perspective, and it also throws off a healthy 5.4% dividend. Cedar Point has been consistently voted “the best amusement park in the world,” and with the national economy improving, LeBron James isn’t the only one planning a trip to Ohio this summer – millions of coaster-lovers will be passing through Cedar Point’s turnstiles, helping to pay that dividend and provide capital appreciation for Cedar Fair’s shareholders. You should consider being among them!