Summer is quickly approaching and so its seasonal investment opportunities.
There are lots of seasonal trends that investors try to take advantage of. We’ve written about three summer stocks that benefited from this year’s “polar vortex,” retail trends related to Black Friday and more.
With so many industries that rely on revenues earned over the next few summer months, I decided to take a look at the best of these companies. After considering yield, growth and stability, I have come up with three summer stocks to buy now.
Summer Stock #1: Cedar Fair
Buying shares of Cedar Fair (NYSE: FUN) and Six Flags Entertainment (NYSE: SIX) represents an investment in amusement parks. There are other companies that own amusement parks but none with the same kind of direct exposure to this industry.
Cedar Fair is the clear winner here. For starters, its flagship park – Cedar Point – is arguably the best amusement park in the world and attracts visitors from all over the world.
The stock currently has a dividend yield around 5.3% and the company has been consistently raising that dividend in recent years.
Cedar Fair was hit hard by the financial crisis and the company cut its annual payout to only $0.25 in 2010. But in 2011 the company paid $1.00 in dividends and is expected to pay $2.80 to shareholders in 2014.
If you expect the economy to remain strong then you can expect Cedar Fair to be strong as well.
Cedar Fair stock trades at a PE of 22. Though this seems high, it is significantly lower than that of rival Six Flags, trading at a PE of almost 35. Plus Cedar Fair offers a much juicier dividend than Six Flags’ 4.6% yield.
Summer Stock #2: Home Depot/Lowes
The two dominant players in the home improvement space are clearly Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW).
As suppliers of grills, propane, charcoal, plants, lawn-care supplies, pest control products and so much more, these companies are uniquely positioned to profit from a wide range of popular summer activities.
While the perennial debate here is which company makes for a smarter investment, Home Depot shareholders seem to have won time and time again.
Though Lowe’s has outperformed over the past year, I would argue that Home Depot remains the champion in this space.
Home Depot yields 2.3% compared to just under 2% paid out to shareholders of Lowe’s. Home Depot’s historical performance also outpaces that of Lowe’s. Over the past five years Home Depot’s stock has surged 250%. Shares of Lowe’s have only risen around 150% during that same period.
The company is managed well and is expected to achieve 17% earnings growth in the 2015 fiscal year, making this a great stock to own right now.
Summer Stock #3: Cabela’s
Summer is a great time to get outdoors. And as the outfitter for just about all things outdoorsy, Cabela’s (NYSE: CAB) stock is a great way to profit from this trend.
The early summer has historically been a good time to own Cabela’s stock. Take a look at the performance between June 1 and July 31 over the past five years.
- Up 2% in 2013
- Up 25% in 2012
- Up 13% in 2011
- Down 9% in 2010
- Up 22% in 2009
If you’re looking for a seasonal short-term trade this could be a good trend for you to focus on. And if you’re looking for a good long-term buy, Cabela’s is a great stock to own.
With estimated annual earnings growth of 18% in the 2015 fiscal year, Cabela’s is a retail stock on the move.
Shares have jumped 363% over the past five years. The stock is actually down almost 8% so far this year and this could be a great time to profit from the company’s strong summer sales trend.
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