Fourth of July celebrations are instilling optimism among American investors given the increased number of vaccination and reopening of the economy. Huge infrastructure spending package and expanded stimulus are encouraging consumers to spend higher in this holiday weekend.
According to the National Retail Federation (NRF), about 84% Americans plan to spend $80.54 per person this Independence Day, up from $76.49 in 2020 and $73.33 in 2019. The 35 to 44 years old age group is planning to spend the most money on food — $91.78 per person. Cookouts, barbecues and picnics continue to be the most popular activity (61%), followed by fireworks and community celebrations (33%). As such, Independence Day marks the beginning of the busiest half of the year for retailers. Many retailers are already flashing exciting deals for July Fourth and massive discounts are in the cards for a specific day.
Fourth of July is a busy time for travel and vacations too. Near record number of Americans are gearing up to travel by road or air this holiday after the hiatus of one and half years. Per AAA, more than 47.7 million Americans are expected to drive or fly to a holiday destination this Independence Day (Jul 1–5). This represents an increase of 40% from last year and would mark the second-highest Independence Day travel volume on record, trailing only 2019. Of them, 43.6 million will go on road trip, 3.5 million will fly, and 0.62 million will travel by trains, buses and cruises.
Though gas and oil prices are soaring, road trips are expected to dominate with 91% of the Americans traveling by car. Notably, gas prices are hovering around $3.13 per gallon — the highest since October 2014. This is 43% higher than this time last year and 2% more than Memorial Day weekend, according to a GasBuddy analysis.
Additionally, travelers’ wallets will feel the pinch when paying for car rentals, and most mid-range hotels. Average daily car rental rates have increased 86% from last year. Mid-range hotel rates have increased 32-35%, with average nightly rates of $156 for AAA Two Diamond and $398 for AAA Three Diamond. However, airfares on average have declined 2% from the last Independence Day.
Given increased activities around this day, the stock market, which is already booming this year, will see further rally. Based on the historical behavior of the S&P 500 Index from five trading days before to five trading days after Fourth of July, average daily returns during these 10 days is 0.08% over the period of 71 years (1950-2020) compared with 0.03% for all days since 1950.
While the gains are broad-based, several industries like transportation, lodging, hotel, restaurants, food and retail could see a huge boost as higher spending will likely propel revenues of the companies in these industries. Below, we have highlighted some attractive picks.
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SeaWorld Entertainment Inc. (SEAS)
It is a Florida-based theme park and entertainment company operating primarily in the United States. The stock has an expected revenue and earnings growth of 181.3% and 125.6%, respectively, for this year. The stock has a Zacks Rank #2 and a Momentum Score of A.
Dine Brands Global Inc (DIN)
This California-based full-service dining company operates and franchises restaurants under both the Applebee's Neighborhood Grill & Bar and IHOP brands. The company is estimated to see revenue growth of 27.5% and earnings growth of 269.3% for this year. It sports a Zacks Rank #1 and has a Growth Score of B.
US Foods Holding Corp. (USFD)
The Illinois-based foodservice distributor serves independent and multi-unit restaurants, healthcare and hospitality entities, government and educational institutions. The stock has an expected revenue and earnings growth of 20.5% and 1,689%, respectively, for this year. The stock has a Zacks Rank #1 and Momentum Score of B.
Spirit Airlines Inc. (SAVE)
The Florida-based company is an ultra low-cost carrier providing travel opportunities principally to and from South Florida, the Caribbean and Latin America. The stock has an estimated growth of 79.1% for revenues and 62.8% for earnings this year. It carries a Zacks Rank #2 and has a Momentum Score of B.
Echo Global Logistics Inc. (ECHO)
The Illinois-based firm is a leading provider of technology-enabled transportation and supply chain management services, delivered on a proprietary technology platform, serving the transportation and logistics’ needs of its clients. The stock has an expected revenue and earnings growth of 26.7% and 60.1%, respectively, for this year. It carries a Zacks Rank #2 and has a Growth Score of B.
