The final stretch of 2021 has arrived. With the holiday season fast approaching, companies are positioning themselves for what will likely be another robust shopping season. This year’s Thanksgiving is expected to provide a significant boost, particularly to the travel, retail and food industries. Further, long-time investors often view the Thanksgiving season as an opportunity to realign their portfolios. Therefore, I’ll discuss seven stocks to buy for a prosperous run into year-end.
Holiday spending is forecast to set a record this season. Given all the talk about supply-chain issues, Christmas shopping is already underway for many folks. Specifically, The National Retail Federation forecasts that U.S. holiday sales are expected to grow between 8.5% and 10.5% year-over-year (YOY). As a result, spending could reach around $850 billion in the final two months of the year.
Moreover, a new survey from The Vacationer suggests about 109 million adults could travel this year around Thanksgiving. As Covid-19 worries continue to ease, millions of Americans plan to go on holiday in the coming weeks. What’s more, the survey revealed that more than 10% of travelers will likely travel by air. Additionally, 20% of those traveling on Thanksgiving plan to spend more than $500 on hotels, tickets and flights.
So, with that information said, here are stocks to buy that should generate generous returns for long-term investors:
- Celsius (NASDAQ:CELH)
- Delta Air Lines (NYSE:DAL)
- Expedia (NASDAQ:EXPE)
- Hain Celestial (NASDAQ:HAIN)
- Lululemon Athletica (NASDAQ:LULU)
- TripAdvisor (NASDAQ:TRIP)
- Walmart (NYSE:WMT)
Stocks to Buy: Celsius (CELH)
52-week range: $30.11 – $110.22
First up on this list of stocks to buy is CELH stock. Based in Florida, Celsius is known for its energy drinks enriched with vitamins and minerals. The company believes its offerings complement an active lifestyle.
Celsius announced third-quarter results on Nov. 12. For the period, total revenue surged nearly 158% YOY to $94.9 million. Further, the North American market reported a 214% surge in sales. Net income declined over 4% YOY to $2.75 million, or 3 cents per diluted share, compared to $4.75 million or 6 cents per diluted share in the prior-year quarter. Finally, cash and equivalents ended the quarter at $61.38 million. On the results, CEO John Fieldly remarked the following:
“In order to hit the majority of our orders during the quarter, we did have to sacrifice efficiencies on the margin side, which we believe are either one-time costs or short term in nature.”
As a barely profitable company, Celsius is focused on maximizing top-line growth. The company set a new revenue record with energy drink and protein bar sales growing rapidly. In addition, management is aggressively working on expanding its retail footprint. Its direct store delivery network, where it ships products directly to each retail store rather than a distribution center, has been a significant growth driver as well.
Currently, CELH stock hovers around $73 per share, up 49% year-to-date (YTD) and 134% over the past year. Shares are trading close to 23 times trailing sales. A potential decline toward $50 would offer a better entry point here.
Delta Air Lines (DAL)
52-week range: $36.97 – $52.28
Based in Atlanta, Georgia, Delta Air Lines is one of the leading airlines worldwide. Its flight network covers 300 destinations in more than 50 countries.
Delta released Q3 results in mid-October. For the period, adjusted operating revenue (which excludes third-party refinery sales) came in at $8.3 billion, down 34% from the same quarter in 2019. Further, net income stood at $1.21 billion, or $1.89 per diluted share. That is down 19% from the same period in 2019. Finally, the company ended the quarter at $15.8 billion in liquidity. On the results, CEO Ed Bastian noted:
“Our September quarter marked an important milestone in our recovery, with our first quarterly profit since the start of the pandemic […] Our revenues reached two-thirds of 2019 levels thanks to the industry-leading operational performance our people delivered through a busy summer, once again showing why they are the best in the business.”
Given its weight in the commercial flight market, Delta is well-positioned to benefit from the current travel boom. Its international flights recently started operating at full capacity. Further, international bookings have soared by 450% since the U.S. announced plans to ease travel restrictions.
Delta’s solid balance sheet and healthy labor relations position the company among the first air carriers to recover from the pandemic. However, this pick of the stocks to buy could come under pressure if the demand for air travel slows down once again due to a new coronavirus variant.
DAL stock hovers around $40 currently, down 21% from its high in March. Shares are relatively flat YTD. DAL is trading at 9.8 times forward earnings and 1.05 times trailing sales. Interested readers could consider buying in now for the long run.
Stocks to Buy: Expedia (EXPE)
52-week range: $118.30 – $191.85
Next up on this list of stocks to buy is Expedia, one of the largest online travel agencies worldwide in terms of bookings. The company operates popular travel booking sites such as Expedia.com, Hotels.com, Travelocity and Orbitz. Transaction fees for online bookings account for the majority of its sales and profits.
Like other names on this list, Expedia reported Q3 results in early November. For the quarter, revenue increased 97% YOY to $2.96 billion. Further, the company reported net income of $362 million, or $2.26 per share, compared to a net loss of $221 million or a $1.56 loss per share in the prior-year period. Bottom-line performance easily beat analyst forecasts of $1.65 earnings per share (EPS). Lastly, cash and equivalents ended the quarter at $6.62 billion. Following the results, CEO Peter Kern remarked the following:
“Despite continued volatility in the travel recovery, Expedia Group’s net income and adjusted EBITDA for the quarter nearly matched our Q3 2019 levels driven by the superior performance from Vrbo and domestic travel along with improvements across virtually all lines of business.”
Revenues generated by lodging, air and the advertising and media segments soared by 87%, 128% and 116% YOY, respectively, revealing an overall increase in travel spending during the quarter. Expedia also recently announced plans to combine its loyalty programs — consisting of 145 million-plus members — into “a single program spanning all global brands and products.”
Given its stronger pricing and volume, Expedia looks like an attractive value pick for long-term investors right now. EXPE stock hovers at slightly above $175 territory, up about 33% YTD. Shares are trading at 26 times forward earnings and roughly 3.6 times trailing sales.
Hain Celestial (HAIN)
52-week range: $35.57 – $48.88
The next pick on this list of stocks to buy, Hain Celestial offers natural and organic consumer products. Grocery items account for a majority of revenue, followed by snacks, personal care products and tea. Furthermore, the company’s products are sold across traditional grocery stores and supermarkets, mass-market retailers, club warehouses, drugstores, restaurants and on e-commerce sites.
Management released Q1 fiscal 2022 results back on Nov. 9. For the period, net sales decreased 9% YOY to $454.9 million. What’s more, adjusted net income came in at $23.8 million, or 25 cents per share, compared to $27.4 million or 27 cents per share in the prior-year period. Cash and equivalents ended the quarter at about $29 million as well. In the release, CEO Mark Schiller said the following:
“We are pleased to have delivered better top line and bottom line first quarter performance than our guidance as we navigated a challenging operating environment affected by industry-wide inflation and labor challenges.”
Hain has been a leading player in the natural and organic products space over the past three decades. The company has also expanded into markets such as Europe and India. Further, it boasts numerous beauty products under various brands such as Alba Botanica and Avalon Organics as well.
HAIN stock hit a 52-week high of $48.88 on Nov. 10. After that, however, its announcement of a secondary offering for 12.4 million shares led to a sharp decline over the past several days. The stock currently hovers at around $41, up 2.5% YTD. HAIN shares are trading at 26.3 times forward earnings and 2.16 times trailing sales.
Stocks to Buy: Lululemon Athletica (LULU)
52-week range: $269.28 – $485.83
Based in Vancouver, Canada, Lululemon is a well-known athletic and leisure apparel brand. This company offers consumers pants, tops, shorts and jackets for leisure as well as athletic activities like yoga and running. Lululemon sells its merchandise through nearly 500 company-owned stores in 17 countries, as well as via e-commerce and wholesale accounts.
This apparel retailer released Q2 results back in early September. For the period, total revenue increased 61% YOY to $1.5 billion. Further, net income came in at $208 million, or $1.59 per diluted share. That’s compared to 66 cents per diluted share in the prior-year quarter and 96 cents in Q2 2019. Lastly, cash and equivalents ended the quarter at $1.2 billion.
Wall Street concurs that this brand has significant growth potential in terms of demographic and international expansion. In addition, the recent acquisition of Mirror — its home fitness company — should allow Lululemon to develop an even stronger brand, increasing customer loyalty while creating significant synergies. Lululemon also acquired the rights to outfit Canada’s Olympic teams from the 2022 Winter Olympics in Beijing through the 2028 Summer Olympics in Los Angeles.
All told, this company’s focus on the “athleisure” niche segment should continue to generate solid returns for long-term investors. LULU stock currently trades slightly above $475, up 37% YTD. Currently, its forward price-to-earnings (P/E) and trailing price-to-sales (P/S) ratios are 52.63 times and 11.16 times, respectively. A potential decline toward $425 would improve the margin of safety for this one of the stocks to buy.
TripAdvisor (TRIP)
52-week range: $25.02 – $64.95
Another name in the travel space, Massachusetts-based TripAdvisor is a leading travel-planning platform that provides online hotel reservations alongside other travel-related bookings, such as restaurants and transportation.
TripAdvisor announced Q3 results on Nov. 8. For the period, total revenue increased to $303 million, representing sequential growth of 29% and impressive YOY growth of 101%. Investors were pleased with solid performance in all segments.
For example, non-GAAP net income came in at $23 million, or 16 cents per diluted share, compared to a non-GAAP net loss of $23 million or a 17 cent loss per diluted share in the prior-year quarter. The company burned $79 million through the quarter. Cash and equivalents ended the period at $682 million as well. Following the announcement, CEO Steve Kaufer noted the following:
“We are pleased to see a continued pick-up in consumer travel demand as borders open and vaccinations are more widely administered.”
This pick of the stocks to buy has seen a solid surge in travel demand. However, its network traffic still remains below 2019 levels. According to The Motley Fool, monthly user traffic “sat at 76%, compared to two years ago.”
Right now, TRIP stock trades in the $29 territory, 55% lower than its 52-week high. Shares are up just 1% YTD. Currently, TRIP is changing hands at 18 times forward earnings and 5.2 times trailing sales. Interested readers could regard the $28 level as a better entry point for this name.
Stocks to Buy: Walmart (WMT)
52-week range: $126.28 – $153.66
Dividend yield: 1.55%
Last up on this list of stocks to buy is a retail giant: WMT stock. Walmart is one of the United States’ largest retailers by revenue. The mega-cap company operates around 11,500 stores.
Like other names on this list, Walmart released Q3 fiscal 2022 results in mid-November. For the quarter, total revenue increased 4.3% YOY to $140.5 billion. However, net income fell to $3.1 billion, or $1.11 per diluted share, down from $5.14 billion or $1.80 per diluted share a year earlier. Further, free cash flow stood at $7.7 billion while cash and equivalents ended the period at $16.17 billion. After the announcement, CEO Doug McMillon remarked the following:
“Our momentum continues with strong sales and profit growth globally. Our omnichannel focus is pushing digital penetration to record levels.”
What’s more, Walmart continues to see increased demand from price-sensitive shoppers. CFO Brett Biggs noted the following:
“We’ve always been an inflation fighter for customers […] Our scale and the product breadth that we have allows us to do things in a way that is beneficial to customers and beneficial to shareholders.”
Walmart’s size has significantly helped the company cope with the global supply-chain crisis. The retailer ordered its overseas merchandise early and stocked up on inventory. It has also chartered its own ships to avoid potential logistical headaches.
In the report, this company raised its forecast for the year, predicting adjusted EPS to come in around $6.40. Today, WMT shares hover at $142, down about 1% YTD. The stock is trading at 21.4 times forward earnings and 0.7 times trailing sales. Buy-and-hold investors could consider investing around these levels.
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.