Fourth of July celebrations are instilling optimism among American investors. While fewer (216 million) Americans plan to celebrate Independence Day this year, with total spending of $6.91 billion, the real encouragement comes from travel and barbecue. Last year, 219 million Americans celebrated the event and spent a total of $7.1 billion.
More than 62% of Americans plan to attend a cookout or barbecue, 43% plan to attend fireworks displays, 13% will travel over the holidays, and 12% plan to go to a parade this year, per the National Retail Federation (NRF). Spending per household is expected to grow 2.6% to $75.35 on food for cookouts and barbecues. As such, many retailers are already flashing exciting deals for July Fourth and huge discounts are in the cards. Notably, Independence Day marks the beginning of the busiest half of the year for retailers.
Fourth of July is a busy time for travel and vacations too. Thanks to a booming economy, solid employment, and growing consumer confidence, a record number of Americans are gearing up for travel season by road or air this time. AAA estimates that a record 46.9 million Americans will travel 50 miles or more during the holiday weekend (Jul 3 to Jul 8), up 5% from last year. Of them, 39.7 million will go on a road trip, 3.8 million will fly, and 3.5 million will travel by train and other modes (including buses and cruises).
Though road trips are expected to rise 5.1% over last year, motorists are expected to pay a higher gas price than last year but less than what they paid for Memorial Day this year. Gas prices peaked at $2.97 per gallon nationwide during the Memorial Day weekend and have since then lowered to a $2.87 per gallon national average. The prices are also well below the $3.60 average from Independence Day 2014.
Additionally, travelers taking to the skies will pay an average $171 for a round-trip flight on the top 40 domestic routes, per AAA’s Leisure Travel Index. This is the lowest Independence Day airfare in five years, and 9% lower than last year. However, travelers’ wallets will feel the pinch when paying for car rentals, and most mid-range hotels. The average daily cost of a car rental is 2% expensive than last year while the average nightly rate at AAA Two Diamond hotels is 11% more at $147 and AAA Three Diamond hotels is 2% more at $187.
Given increased activities around this day, the holiday fervor leads to some strength in the stock market. 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 0.09% 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 that are supported by a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of B or better, indicating their strong fundamentals and outperformance heading into the Independence Day.
Echo Global Logistics Inc. ECHO
The Illinois-based Echo Global Logistics 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 21.38% and 69.77%, respectively, for this year. The stock sports a Zacks Rank #1 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Extended Stay America Inc. STAY
The North Carolina-based Extended Stay America is the owner/operator of company-branded hotels in North America. It owns and operates hotels under the core brand, Extended Stay America. The stock has an estimated earnings growth of 15.00% for this year though revenue is expected to decline a slight 0.16%. It carries a Zacks Rank #2 and has a Growth Score of B.
Domino's Pizza Inc DPZ
The Michigan-based Domino's Pizza is the second largest pizza restaurant chain in the world. The company is estimated to see revenue growth of 24.48% and earnings growth of 55.24% for this year. It has a Zacks Rank #2 and Growth Score of A.
Xcel Brands Inc XELB
The New York-based Xcel Brands operates as a brand management company. It is focused on the acquisition, design, and licensing, marketing and retail sales of consumer brands, including apparel, footwear and sporting goods. The stock has an expected revenue and earnings growth of 6.29% and 7.69%, respectively, for this year. The stock has a Zacks Rank #2 and Growth Score of A.
The Chefs' Warehouse Inc. CHEF
The Connecticut-based Chefs' Warehouse is a distributor of specialty food products in the United States. The company is focused on serving the specific needs of chefs who own and/or operate restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools and specialty food stores. It is estimated to see revenue growth of 9.04% and earnings growth of 65.91% for this year. It has a Zacks Rank #2 and Growth Score of A.
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