The coronavirus pandemic hammered the global economy, especially sectors like travel, restaurants and cinemas. However, as the economy slowly but surely comes back to normal, analysts believe that it's the right time to pile into stocks that are still feeling the effects of the pandemic but are expected to rebound in the long run.
According to a report by Fortune, the global tourism industry lost over $4.5 trillion in 2020. A complete rebound is still far away but airline stocks offer a good entry point for long term investors. In June, The Transportation Security Administration announced over 2 million security screenings at the airport for the first time since March 2020.
Earnings of companies like The Boeing Company (NYSE: BA), Airbnb, Inc. (NASDAQ: ABNB), American Airlines Group Inc. (NASDAQ: AAL), and The Walt Disney Company (NYSE: DIS) are showing improvement. The Boeing Company (NYSE: BA) reported a quarterly profit in almost two years in the second quarter of 2021. Similarly, American Airlines Group Inc. (NASDAQ: AAL) plans to operate over 150 new routes this summer, and Airbnb, Inc. (NASDAQ: ABNB) plans to recruit more Hosts in 2021 due to strong demand for bookings.
Analysts believe that investing in certain restaurant stocks is also a decent way to profit from the economic reopening. Companies like Chipotle Mexican Grill, Inc. (NYSE: CMG) and Restaurant Brands International Inc. (NYSE: QSR) are gaining investors’ attention due to strong sales in recent quarters. Chipotle Mexican Grill, Inc. (NYSE: CMG) boosted sales through alternative channels, including digital deliveries, drive-thrus, and delivery services.
Overall, restaurant sales have surpassed the 2019 levels as food and drinking services generated over $64.9 billion in April, according to the U.S. Census Bureau. Moreover, Dow Jones U.S. Restaurants & Bars Index gained 14.5% in 2021.
Best Reopening Stocks to Buy Now
15. Ryder System, Inc.
Number of Hedge Fund Holders: 18
Ryder System, Inc. (NYSE: R) is an American logistic company mainly known for renting out its fleet of commercial trucks. The company operates in the U.S., Canada, Mexico, and the United Kingdom and manages over 235,000 commercial vehicles.
According to analysts, Ryder System, Inc. (NYSE: R) can benefit from used trucks valuations as the company is effectively cutting costs. In Q2 2021, Ryder System, Inc. (NYSE: R) reported double-digit revenue growth in all business segments. The revenue of $2.4 billion presented a 26% year-over-year growth. This growth can be attributed to the strong lease and rental performance and sales of used vehicles.
For FY21, Ryder System, Inc. (NYSE: R) expects an EPS of $7.20 to $7.50 versus a $5.92 consensus. The company also expects share buybacks in the upcoming quarters. Recently, Baird lifted its price target on Ryder System, Inc. (NYSE: R) to $90, with a ‘Buy’ rating on the shares. Ryder System, Inc. (NYSE: R) has delivered a 96.5% return to shareholders in the past year.
As of Q2 2021, 18 hedge funds have positions in Ryder System, Inc. (NYSE: R). The total value of these stakes is over $271 million.
14. Restaurant Brands International Inc.
Number of Hedge Fund Holders: 22
Restaurant Brands International Inc. (NYSE: QSR) is a multinational fast-food holding company that owns some of the most famous fast-food chains, such as Burger King, Tim Hortons, and Popeyes.
Restaurant Brands International Inc. (NYSE: QSR) is recovering from the detrimental effects of the pandemic as the company opened nearly 378 new restaurants in the first half of 2021. RBC Capital sees a potential development in all three brands of the company as the unit growth returns to the pre-pandemic levels. In August, the firm lifted its price target on Restaurant Brands International Inc. (NYSE: QSR) to $80 and kept an ‘Outperform’ rating. Restaurant Brands International Inc. (NYSE: QSR) has soared by 17.7% in the past year.
As of Q2 2021, 22 hedge funds tracked by Insider Monkey have positions in Restaurant Brands International Inc. (NYSE: QSR), worth over $2 billion.
released its Q4 2020 investor letter and mentioned Restaurant Brands International Inc. (NYSE: QSR) in it. is what the firm has to say:
QSR’s franchised business model is a high-quality, capital-light, growing annuity that generates high-margin brand royalty fees from three leading brands: Burger King, Tim Hortons and Popeyes. The company nimbly navigated difficult market conditions in 2020 by assisting franchisees, while maintaining its long-term growth potential.
As the COVID-19 pandemic began, management undertook a series of steps to secure and strengthen the business. The company quickly bolstered safety procedures and shifted marketing spend to highlight the off -premise options available to customers, while supporting its franchisees with fee/cap ex deferrals and liquidity programs. Throughout the year, the company accelerated its digital investments by expanding its delivery footprint, modernizing its drive-thru experience, increasing mobile ordering adoption, and improving its loyalty programs.
While the company’s sales were negatively impacted by the pandemic, comparable sales have already recovered or are well on their way to recovery. Burger King U.S. returned to growth in January; Tim Hortons improved to a high-single-digit decline in Canada during the fourth quarter, and Popeyes U.S. grew 16% in 2020. To accelerate the recovery at Tim Hortons in Canada, the company has committed additional funds to bolster its advertising, and support continued enhancements to its Tim’s Rewards program.
We continue to believe each of Restaurant Brands’ concepts will emerge stronger from this crisis as their business models are competitively advantaged in a socially distant and more budget-conscious consumption environment, and as the company continues to invest in drive-thru, delivery, and digital. We believe QSR’s long-term unit growth opportunity is still intact, and we expect unit growth to return to its mid-single-digit growth rate this year. As investors begin to see the results of these efforts, and underlying sales trends at each of its brands continue to improve, QSR’s share price should more accurately reflect our view of its business fundamentals.”
13. Realty Income Corporation
Number of Hedge Fund Holders: 23
Realty Income Corporation (NYSE: O) is a real estate investment trust, or REIT, that invests in single-tenant commercial properties. The company’s portfolio has over 6,761 properties in over 50 states in the U.S., as well as in the U.K.
In Q2 2021, Realty Income Corporation (NYSE: O) reported revenue of $464.3 million, compared with $414.6 million during the same period last year. According to analysts, the company will be benefiting from the reopening of theatres as it is fully reserved for receivable balances for 37 theatre properties. Moreover, the theatre industry also accounted for 5.4% of the company’s rental revenue. Realty Income Corporation (NYSE: O) pays dividends monthly to the shareholders and has been raising dividends for the past 95 quarters. In June, Mizuho upgraded Realty Income Corporation (NYSE: O) to ‘Buy’ with a $77 price target. The stock has climbed 20.9% in 2021.
As of Q2 2021, 23 hedge funds have positions in Realty Income Corporation (NYSE: O), up from 18 in the previous quarter.
12. American Airlines Group Inc.
Number of Hedge Fund Holders: 25
American Airlines Group Inc. (NASDAQ: AAL) is a major American airline with headquarters in Texas, U.S. The company carries out nearly per day in over 50 countries.
The second-quarter earnings of American Airlines Group Inc. (NASDAQ: AAL) show that the company is poised for a post-pandemic recovery. The operating revenue for Q2 2021 stood at $7.5 billion, up from $1.6 billion during the same period last year. Based on booking trends in the recent months, American Airlines Group Inc. (NASDAQ: AAL) is expecting to utilize over 90% of its domestic seat capacity and 80% of its international seat capacity, as compared with 2019. Moreover, the airline is fully equipped with COVID-19 testing tools for a safer traveling experience. Recently, Deutsche Bank lifted its price target on American Airlines Group Inc. (NASDAQ: AAL) to $23, with a ‘Buy’ rating. The stock has soared by 56.5% in the past year.
As of Q2 2021, 25 hedge funds tracked by Insider Monkey have positions in American Airlines Group Inc. (NASDAQ: AAL), worth $620 million.
11. Abercrombie & Fitch Co.
Number of Hedge Fund Holders: 32
Abercrombie & Fitch Co. (NYSE: ANF) is a lifestyle retail company that focuses on casual wear. The company mainly sells accessories and apparel for men, women, and children.
In Q1 2021, Abercrombie & Fitch Co. (NYSE: ANF) reported a 6% growth in net sales from first-quarter 2019 pre-Covid levels. The consolidated revenue stood at $781.4 million, presenting a 61% year-over-year growth. In the first quarter, Abercrombie & Fitch Co. (NYSE: ANF) reported the best operating income since 2008. The company’s shift toward a digitally-led global business model has boosted digital sales by 52%. In July, Jefferies lifted its price target on Abercrombie & Fitch Co. (NYSE: ANF) to $57, with a ‘Buy’ rating on the shares. The firm observed that Abercrombie & Fitch Co. (NYSE: ANF) would benefit more from its digital channels due to the growing consumers’ interest in online shopping. Abercrombie & Fitch Co. (NYSE: ANF) has gained 232% in the past year.
10. Chipotle Mexican Grill, Inc.
Number of Hedge Fund Holders: 35
Chipotle Mexican Grill, Inc. (NYSE: CMG) is a chain of fast-casual restaurants operating in the U.S., U.K., Canada, Germany, and France. The chain offers Mexican-inspired cuisines, especially tacos and burritos.
The Q2 2021 revenue of Chipotle Mexican Grill, Inc. (NYSE: CMG) surpassed pre-pandemic levels due to the reopening of dine-in restaurants around the world. The company revamped its business model and focused more on digital orders, drive-thru lanes, and pickup deliveries to boost sales in the pandemic-stricken world. In the second quarter, digital sales accounted for 48.5% of the gross revenue, and delivery services generated $23.1 million. Chipotle Mexican Grill, Inc. (NYSE: CMG) opened 56 new restaurants in the second quarter, 45 of which are the drive-thru lanes, Chipotlanes. Peter Saleh, an analyst at BTIG, observed that Chipotle Mexican Grill, Inc. (NYSE: CMG) has multiple channels to drive growth, including Chipotlanes, digital delivery, and menu innovation, which gives the company an edge over its peers. In July, the firm lifted its price target on Chipotle Mexican Grill, Inc. (NYSE: CMG) to $1,850, with a ‘Buy’ rating on the shares.
As of Q2 2021, 35 hedge funds have positions in Chipotle Mexican Grill, Inc. (NYSE: CMG), worth $3.2 billion.
published its fourth-quarter 2020 investor letter and mentioned Chipotle Mexican Grill, Inc. (NYSE: CMG) in it. is what an investment management firm has to say:
“Chipotle’s superb 2020 performance amid a challenging backdrop was due to the successful business transformation led by CEO Brian Niccol and his team. Improved digital access, which has been a pillar of management’s transformation strategy and a growing sales driver in recent years, enabled the company to serve customers with digital pickup and delivery as the pandemic began. Only three months after the onset of COVID-19 in the U.S., Chipotle returned to growth, achieving same-store sales growth of 6% in Q4, or 20% over two years.
The pandemic accelerated a shift in the company’s digital sales mix from just under 20% of sales at the end of 2019 to 70% in April, before settling to about 50% in July, a level which has been maintained through the start of 2021. Management believes that the majority of these digital sales are incremental, noting that in the 60% of stores with dining rooms open, 80% to 85% of digital sales gains are being retained while 50% to 60% of in-store sales have been recovered.
Management remains confident that the company will emerge even stronger from the COVID-19 pandemic as it continues to execute on a number of long-term strategic initiatives. Chipotle plans to open 200 new restaurants in 2021, a 24% increase from 2020 opening levels, with more than 70% of these new locations featuring a Chipotlane, the company’s high-return, digital drive-thru format.
Chipotle has already launched two new menu innovations in 2021, including cauliflower rice, which was introduced in January and has garnered very favorable early feedback, and the much-anticipated quesadilla, which was launched as a digital-only menu item on March 11th. Chipotle Rewards, a highly effective marketing tool for the company, continues to see enrollment growth with over 19.5 million members as of year-end, compared to 8.5 million members at the end of 2019.
Chipotle is extremely well positioned to execute on the company’s long-term strategy, which should drive substantial shareholder value in the future.”
9. Crocs, Inc.
Number of Hedge Fund Holders: 40
Crocs, Inc. (NASDAQ: CROX) is one of the world’s largest footwear companies that manufactures casual footwear for men, women, and children. The company is massively famous among American middle and high school students.
Crocs, Inc. (NASDAQ: CROX) reported solid earnings in Q2 2021 due to strong consumer demands for the company’s products. Laura Champine, an analyst at Loop Capital, observes momentum in the company’s wholesale and DTC channels, which grew by 112% and 78.6% in Q2 2021, respectively, compared with the prior-year quarter. In FY21, Crocs, Inc. (NASDAQ: CROX) expects revenue growth between 60% and 65% compared with 2020 revenues. Recently, B.Riley lifted its price target on Crocs, Inc. (NASDAQ: CROX) to $152, with a ‘Buy’ rating on the shares. Since the beginning of the year, Crocs, Inc. (NASDAQ: CROX) has delivered a 131% return to shareholders, while its 12-month returns are up by 249.9%.
The hedge funds having positions in Crocs, Inc. (NASDAQ: CROX) also grew to 40 in Q2 2021, compared with 31 in the previous quarter. The total value of these stakes is $931 million.
8. Deere & Company
Number of Hedge Fund Holders: 52
Deere & Company (NYSE: DE) is an American company that manufactures agricultural, construction, and forestry machinery. Along with this, the company also manufactures diesel engines and drivetrains that are used in heavy equipment.
Deere & Company (NYSE: DE) reported strong net sales in the first quarter of 2021 due to the improving market conditions across divisions. The consolidated revenue stood at $12.05 billion, up 30% from the prior-year quarter. In FY21, Deere & Company (NYSE: DE) expects a net income of between $5.3 billion to $5.7 billion due to increased supply chain pressures. According to analysts, Deere & Company (NYSE: DE), along with other steel stocks, can rally as the U.S. Senate has passed a $1 trillion infrastructure bill. The stock gained 39.6% in 2021 and 94.5% in the past year. In July, Credit Suisse lifted its price target on Deere & Company (NYSE: DE) to $439, with an ‘Outperform’ rating on the shares.
As of Q2 2021, 52 hedge funds have positions in Deere & Company (NYSE: DE), worth over $2.1 billion. The number is compared to 51 hedge fund holders in the previous quarter.
released its Q1 2021 investor letter and mentioned Deere & Company (NYSE: DE) in it. is what the firm has to say:
“Lead performers in the portfolio included Deere, which delivered a phenomenal first fiscal quarter ended in January and revealed impressive and previously undisclosed margins in its large equipment segment. Investors also welcomed Deere’s strong pricing power and technology leadership, particularly in precision agriculture, where it has separated itself from competitors.”
7. Airbnb, Inc.
Number of Hedge Fund Holders: 58
Airbnb, Inc. (NASDAQ: ABNB) is an online marketplace that provides homestays for vacations and tourism activities. The company started in 2007 with two Hosts and has now grown to 4 million Hosts in over 220 countries. The services of Airbnb, Inc. (NASDAQ: ABNB) are accessible via their app or website.
In Q2 2021, Airbnb, Inc. (NASDAQ: ABNB) reported revenue of $1.3 billion, presenting a 300% year-over-year growth. The company recorded a 197% year-over-year growth in Nights and Experiences Booked, reaching 83.1 million in Q2. Raymond Liu, an analyst at HSBC, asserted that Airbnb, Inc. (NASDAQ: ABNB) will continue to recover because of the growing travel demand as the company’s revenue has already bounced back above the pre-pandemic level. He also appreciated the distinctive business model of Airbnb, Inc. (NASDAQ: ABNB) and the opportunities it has to offer. The firm lifted its price target on Airbnb, Inc. (NASDAQ: ABNB) to $219, with a ‘Buy’ rating on the shares.
As of Q2 2021, 58 hedge funds have positions in Airbnb, Inc. (NASDAQ: ABNB), up from 52 in the previous quarter. The total worth of these stakes is $2.7 billion.
, an investment management firm, recently released its Q2 2021 investor letter and mentioned Airbnb, Inc. (NASDAQ: ABNB) in it. is what the firm has to say:
"Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.
Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)
Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work.
In short, ABNB fulfills pretty much every element of a business model we’re attracted to: First, it’s highly scalable marketplace-based business model that unites buyer and seller with observable flywheel effects. (This is an important observation, in that the platform creates significant economic value for millions of hosts who rely on Airbnb, which in turn attracts new hosts who identify the opportunity, which creates more inventory, which turn attracts more travelers, which attracts more hosts, and soon.) Second, it has a global focus with significant opportunities to expand its operating leverage; Third, its management—which is still founder-led—stands out to us as long-term thinkers capable of handling crisis, which the team demonstrated throughout the pandemic by dropping operating costs and turning the business into a more efficient, lean organization. (Like Churchill said: “Never let a good crisis go to waste.”)..”
6. The Boeing Company
Number of Hedge Fund Holders: 59
The Boeing Company (NYSE: BA) is an American aerospace company that designs and sells airplanes, rockets, satellites, and telecommunication equipment. The company also provides services in defense technology in over 150 countries including the U.S.
The second quarter of 2021 was the first profitable quarter for The Boeing Company (NYSE: BA) since 2019 due to higher commercial airplane deliveries and services. The consolidated revenue stood at $17 billion, up from $11.8 billion during the same period last year. According to Cowen, the recovery in travel demand has created an upside for The Boeing Company (NYSE: BA). In July, Morgan Stanley upgraded The Boeing Company (NYSE: BA) to ‘Overweight’, with a $274 price target. The stock has gained 30.5% in the past year.
As of Q2 2021, 59 hedge funds have positions in The Boeing Company (NYSE: BA), worth $1.36 billion.